Cairo – Egypt’s cabinet decided Wednesday to raise the price of subsidized bread for the first time in 30 years, Prime Minister Mostafa Madbouly said. The price of a loaf, long set at five piastres (USD 0.001), would quadruple to 20 piastres (USD 0.004), Madbouly told a news conference.
Madbouly acknowledged the move would be unpopular but emphasized the need to “rationalize the burden on the state treasury to ensure the sustainability of subsidies”. Of Egypt’s over 100 million people, 71 million benefitted from bread subsidies, he said.
Egypt’s crisis
Cairo has been suffering an economic crisis, with the currency losing two thirds of its value and inflation soaring to record levels. Egyptians have dipped into life savings to cope with rising food prices in recent years.
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Earlier this year, Cairo received a bailout of over USD 50 billion in loans and investment deals from the International Monetary Fund (IMF), the World Bank and the United Arab Emirates. These deals included promises of reforms, such as limiting the state’s role in the economy and enacting policies to rein in inflation.
Recently, officials have reduced fuel subsidies and raised public transportation prices but avoided changing bread subsidies. The pegged bread price was unsustainable for state coffers, though. Last year’s budget allocated EGP 529 billion (USD 11.2 billion) to subsidies, about a sixth of the total budget.
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Translated by Guilherme Miranda
