President Abdel-Fattah Al-Sisi’s call to raise the price of subsidised bread has sparked controversy. Supporters welcomed it as a wise and timely decision while critics argued any increases must be preceded by a national dialogue.
On 14 August, while inaugurating several new housing projects, President Al-Sisi said there was a pressing need to restructure bread subsidies.
“The subsidised bread system was created 50 years ago, amid conditions markedly different to today’s,” said Al-Sisi. He pointed out that the total subsidies bill stands at LE275 billion for fiscal year 2021/22, equivalent to LE3 trillion over ten years, and that with restructuring, ensuring that subsidies target the neediest, resources will be freed up for education, health and other essential services.
Al-Sisi’s remarks, however, triggered quick reactions in political circles. Two political parties —Tagammu and the Egyptian Socialist Democratic Party — said the “perilous” step of lifting bread subsidies should come only after a national dialogue given millions of Egyptians live under the poverty line.
Atef Meghawri, parliamentary spokesman of the Tagammu Party, said that while President Al-Sisi’s words were clear — the government should move towards restructuring subsidies, not eliminating them — there are fears the Ministry of Supply will seek to circumvent the directive. “We are calling for a national dialogue over bread subsidies, with the participation of parliament and civil society organisations. The issue is of major concern to millions of Egyptians,” he said. Thirty per cent of Egyptians live under the poverty line, pointed out Meghawri. Nor, he said, can raising the minimum wage for state employees to LE 2,400 per month be used to justify lifting bread subsidies, especially when, over the last month, consumers have had to swallow increases in electricity and fuel prices.
Egyptian Socialist Democratic Party spokesperson Maha Abdel-Nasser cautioned that “the issue, which impacts the lives of millions of citizens, cannot be left for the Ministry of Supply to decide”. Abdel-Nasser also stressed that Article 79 of the constitution states all citizens must have access to healthy and sufficient food.
Tagammu MP Marcel Samir noted that the recent rise in electricity, fuel, and natural gas prices pushed inflation rates to 5.9 per cent in July, up from 4.9 per cent in June. “Inflation will increase further in the months ahead if the government decides to raise train and metro ticket prices. There is a limit to the burdens people can shoulder,” warned Samir.
Tagammu senator Ahmed Shabaan said the government appeared to have forgotten that the poor and those on limited income had already shouldered more than their fair share of the burdens imposed by the IMF-inspired economic reform programme between 2016 and 2019, and that the same people were now suffering disproportionately from the economic impact of the coronavirus pandemic.
A hasty decision on bread subsidies threatens wide-ranging civil unrest, said Shaaban, an outcome that could be avoided by instigating a thorough national debate on the ways in which subsidies can be rationalised without hurting the poorest members of society.
Minister of Supply Ali Moselhi announced on Saturday that bread subsidy allocations in fiscal year 2021-22 will reach LE 50.6 billion, up from LE48 billion on the previous 12 months. The number of citizens eligible to receive subsidised bread will also increase from 69.2 million in 2020-21 to 72 million in 2021-22, said Moselhi, while at the same time international wheat prices are on an upward trajectory.
The price for which subsidised bread is sold has remained unchanged since 1984, said Moselhi, a state of affairs that is clearly untenable. He did, however, offer reassurances that the Ministry of Supply will not move to eliminate the subsidy completely but that a committee will be appointed to determine ways in which subsidies can be directed to those who most need them.
MP Ahmed Diab, head of parliament’s Economic Affairs Committee, argued that raising the price of subsidised bread will have modest impact on the majority of citizens, and repeated the oft-heard caveat that subsidised bread is routinely used as animal fodder.
Diab also argued that reducing bread subsidies will make growing wheat a profitable activity for farmers, thus boosting local production.
*A version of this article appears in print in the 26 August, 2021 edition of Al-Ahram Weekly