Egyptians worried by rising bread price after subsidies cut

Politicians join citizens in voicing concern over the impact of subsidy cuts on ability to afford food

Bread being delivered in Cairo. For many Egyptians, raising the cost of this staple food is a red line that evokes memories of the 1977 Bread Riots. AFP
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The Egyptian government's recent decision to raise the price of subsidised bread has left many citizens concerned about their ability to afford basic necessities amid an already challenging economic landscape.

Prime Minister Mostafa Madbouly announced on Wednesday that for the first time in 30 years the price of subsidised bread would increase, from 5 to 20 piastres per loaf, from June 1.

He said the move was necessary to reduce the burden of subsidies on the state budget, as the government currently spends 100 billion Egyptian pounds ($2.1 billion) annually on bread subsidies while recouping only 5 billion pounds.

For Noura El Refaey, a 41-year-old mother of four residing in Cairo's working-class Al Talbiya neighbourhood, the news has only added to her worries.

"Everything has been getting more expensive, from metro tickets to electricity and even meat and vegetables," she said. "I didn't think they would do the same for bread. It's the most basic thing we eat."

Egypt's ration card system provides a lifeline for many citizens, allowing a holder and three family members to receive a daily ration of five flatbread loaves each. About 71 million out of Egypt's 106 million people use the ration system.

For many Egyptians, raising the cost of this staple is a red line that evokes memories of the 1977 Bread Riots, which were triggered by the government's decision to cut subsidies on basic food items as part of an economic reform programme mandated by the World Bank and the International Monetary Fund.

The similarities between the current situation and the events leading up to those riots are striking, with Egypt once again facing economic challenges and enforcing IMF-mandated reforms that include the potential reduction of bread subsidies.

Many citizens also fear the rising cost of bread will have a ripple effect on other essential goods and services.

“Everything else will go up,” said Mr Ali Badawy, a shopkeeper in Cairo's Giza neighbourhood. "Merchants are looking for any excuse to raise prices because everything is getting more expensive very quickly, so mark my words, if the government does not repeal the decision, everything else will get more expensive."

Despite several minimum wage and pension increases in recent years, many Egyptians find that their incomes have failed to keep pace with the rising cost of living. With inflation reaching 32.5 per cent in April and the Egyptian pound depreciating by 70 per cent since March 2022 following four devaluations, the population's purchasing power has been severely eroded.

The government's decision has been criticised by civil society groups and MPs. Dr Freddy Al Bayady, a member of the House of Representatives and vice president of the Egyptian Democratic Party, submitted an urgent briefing request to the Prime Minister Mostafa Madbouly and key ministers, stating that subsidised bread is a matter of national security and should not be compromised.

Diesel next?

Amid the concern over the price of bread, Mr Madbouly hinted during a recent speech at plans to increase the price of diesel, which is crucial for most of the country's industry.

He attributed the lifting of subsidies to Egypt's population growth and increasing global prices for petrochemicals and foodstuffs.

Mr Madbouly said the government was developing a shift from an in-kind subsidy system to a cash subsidy system. He said the new programme was still in the planning phase and could be introduced by the 2025/26 fiscal year.

Under the programme, the state will continue to subsidise essential goods but at a lower rate than before, he said. It was "impossible" to continue with the current set up, he added.

Despite Mr Madbouly’s promises that the government will not abandon the people, many Egyptians remain apprehensive about their future.

"These really are extraordinary times for Egypt," said Ms El Refaey. "I had been hoping that things would get better but this makes me very worried."

The challenges faced by Egyptians in light of the planned subsidy cuts highlight the delicate balance between economic reforms and social welfare in a country where a significant portion of the population lives below the poverty line.

As the government navigates this complex landscape, citizens anxiously await the impact of these decisions on their daily lives.

Updated: May 31, 2024, 6:50 AM