To help alleviate the economic burdens of the poorer segments of society, the government announced a three-pronged plan to help families most in need last week.
The social protection plan is being shouldered by the public treasury, which will meet LE8.5 billion of the costs, with another LE2.4 billion being met by the National Alliance for Civil Development Work.
The latter was launched in March and comprises 24 development associations, the minister of social solidarity said when announcing the new plan.
The first part of the plan pays exceptional cash aid to 9.1 million eligible families, a total of 37 million people, for six months. Those eligible were selected from data provided by the Administrative Control Authority and the Ministry of Social Solidarity of the neediest families.
The aid will cost LE1 million per month and will be dispensed through Meeza and ration cards.
Also eligible for the aid are pensioners who receive less than LE2,500 per month and family breadwinners who work in the Administrative Authority and receive less than LE2,700 in wages.
The second part of the plan increases the number of beneficiaries of the Takaful and Karama (Solidarity and Dignity) social protection programmes. A presidential decree in April added 450,000 families to the programmes, with the number reaching 4.1 million.
President Abdel-Fattah Al-Sisi ordered the addition of a further million families to the programmes this week, meaning that they now provide cash subsidies to some five million families, or more than 20 million individuals.
The budget of the two programmes has been increased by LE5.4 billion, LE3 billion of which is shouldered by the state and the rest by the National Alliance for Civil Development Work.
The Takaful and Karama programmes were initiated in 2015 with the support of the World Bank with total allocations of $400 million.
The third part of the plan distributes subsidised ration boxes containing several types of staple food at half price among the poorest individuals. The boxes, half the cost of which is paid by the state, will be available for sale at outlets of the Armed Forces, the Interior ministry, and the Ministry of Supply in the poorest areas.
The Ministry of Religious Endowments will coordinate with the Ministry of Supply to distribute meat. The Ministry of Social Solidarity will distribute meat and other food supplies in the poorest villages.
Families and individuals eligible for this kind of aid will need to present their identification cards, and the distribution will be conducted through committees made up of civil society and youth bodies, along with others, to ensure fair distribution.
Hani Geneina, a professor of finance at the American University in Cairo, said that the government would pay the cost of these measures from reserves in the budget of the current fiscal year, estimated at LE130 billion.
The measures are in line with talks between Egypt and the International Monetary Fund (IMF), he said. The IMF does not object to increasing cash support, but it is against further subsidies, he said.
Vulnerable families in Egypt have been severely affected by rising prices owing to the war in Ukraine, with some goods increasing by up to 30 per cent, Geneina said. He expects the government to announce another batch of social protection measures later this year to enable the neediest families to face up to recent price hikes.
According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), annual urban inflation hit 13.2 per cent in June and 13.5 per cent in May, up from 4.9 per cent in June 2021. Annual core inflation, computed by the Central Bank of Egypt (CBE), recorded 14.6 per cent in June, up from 13.3 per cent in May.
Mohamed Hassan, managing director and CEO of Blom Egypt Investments, said the aid package the government has announced will increase the budget deficit, adding that emergency aid has been allocated to meet urgent crises, such as the coronavirus pandemic.
According to the draft budget announced by Minister of Finance Mohamed Maait, the budget deficit, the difference between revenues and expenditures excluding debt servicing, has reached $30.18 billion, or 6.1 per cent of GDP.
*A version of this article appears in print in the 4 August, 2022 edition of Al-Ahram Weekly.