In a significant policy shift, Egypt’s Prime Minister Mostafa Madbouly has announced a 300% increase in the price of subsidized bread, effective in June. This will be the first increase in decades for a staple that two-thirds of the Egyptian population depends on daily.
Adjusting to Economic Realities
The price hike will see the cost of subsidized bread rise from 5 piasters to 20 piasters ($0.0042) per loaf. The decision aims to address the financial burden of the subsidy program, which has long been a major strain on Egypt’s budget.
“We understand fully that the price rise is a sensitive issue, and many previous governments avoided addressing it,” Madbouly stated during a press conference. “However, the size of the subsidy bill necessitates this move to ensure the sustainability of services.”
Economic Context and Subsidy Reform
This decision follows a period of economic turbulence, marked by a sharp devaluation of Egypt’s currency in March and a shift to a flexible exchange rate system. Inflation peaked last summer but has since moderated somewhat. The government is exploring a shift towards conditional cash subsidies for bread to enhance the efficiency of the support system.
Supply Minister Ali Moselhy noted that the new price still represents a small portion of the actual production cost, which has increased to 125 piasters per loaf from 115 piasters last year. The Finance Ministry has allocated approximately 125 billion Egyptian pounds ($2.66 billion) for bread subsidies in the 2024/2025 budget, along with 147 billion pounds for petroleum product subsidies.
Historical Sensitivity and Future Plans
Egypt, a major global wheat importer, brought in about 10.88 million metric tons of wheat in 2023, up 14.7% from the previous year. The importance of bread subsidies is deeply ingrained in the country’s social fabric, as highlighted by the 1977 riots triggered by an attempt to reform the subsidy system.
Madbouly emphasized that this increase is part of a broader strategy to manage subsidy costs effectively while continuing to support the nation’s most vulnerable. The government has received significant financial support from the International Monetary Fund (IMF), the United Arab Emirates (UAE), and other entities, which is expected to help stabilize the economy and support ongoing reforms.
The increase in bread prices is a necessary step towards economic sustainability, aiming to balance fiscal responsibility with the imperative to maintain social stability and support for Egypt’s poorest citizens.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
30th May, 2024
Article and News Disclaimer
The information provided on www.serrarigroup.com is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
www.serrarigroup.com is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
In no event will www.serrarigroup.com be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.
The articles, news, and information presented on www.serrarigroup.com reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.
The content on www.serrarigroup.com may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, www.serrarigroup.com takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.
By using www.serrarigroup.com, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website.
www.serrarigroup.com, reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.
Serrari Group 2023
