Bread, land and rents

Gamal Essam El-Din , Friday 25 Feb 2022

The cabinet is seeking to rationalise the bread subsidy system, halt infringements on agricultural land, and reform rental laws.

Bread, land and rents
The Cabinet during a meeting

A detailed report on the government’s socio-economic programme between 2018 and 2021 has been submitted to both chambers of parliament, Prime Minister Mustafa Madbouli said on Monday.

Egypt Kicks Off, the governments three year programme, won a vote of confidence in parliament in July 2018. The report into its results itemises the ways the government has acted to contain the fall-out of the coronavirus pandemic, particularly its impact on low-income citizens, and how the three-year economic reform programme between 2016 and 2019 helped Egypt ride out the ensuing economic storm. Egypt was one of the few countries to achieve positive economic growth in 2020 and 2021.

The report also notes an increased focus on the health sector, saying that “budget priorities were modified to help the health sector absorb the pandemic’s shock in terms of buying and manufacturing vaccines and rehabilitating hospitals and medical clinics”.

According to the report, the success of the 2016-2019 economic reforms prompted the government to implement a national programme of further structural reforms in April 2021.

“This additional three-year programme does not aim to add more financial burden on Egyptian citizens, but seeks to help the Egyptian economy become more productive and competitive by creating a friendly climate for private businesses and investments, and improving the performance of public institutions through digitising their operations,” says the report.

It cites Prime Minister Madbouli as saying that after three years of implementing the Egypt Kicks Off programme Egypt has attained the confidence of international economic institutions, including the International Monetary Fund (IMF) and the World Bank.

“The two organisations agreed that not only did the Egyptian economy show great resilience in the face of coronavirus shock, but was able to achieve higher rates of economic growth,” says the report.

The report is divided into six chapters, each tackling a national strategic objective: achieving sustainable economic growth; improving the government’s performance; upgrading production systems and operations; raising the standard of living for citizens; combatting the fall-out from the pandemic, and safeguarding national security against foreign threats.

The government, according to Madbouli, is currently preparing to face three serious challenges. “They are old and inherited problems: protecting agricultural land from illegal infringements; rationalising bread subsidies, and amending the landlord-tenant relationship law,” said the prime minister.

Following a meeting with provincial governors on 17 February, Madbouli said that despite government attempts to contain infringements on agricultural land, local councils have reported that the practice remains rampant.

“The government,” he continued, “will spare no effort in reversing this phenomenon which poses a grave threat to the food security of future generations of Egyptians.”

Any new infringements, Madbouli announced, will be immediately razed, and violators will be barred from accessing subsidies, including on fertilizers, bread and other food supplies.

Madbouli said he had also instructed the Justice Ministry to draft a law criminalising building on agricultural land, and penalising contractors. It makes no sense, he pointed out, for the government to spend billions reclaiming desert land for cultivation while criminals continue to infringe on fertile agricultural land in the Nile delta.

Over the last four decades it is estimated that Egypt has lost 500,000 feddans of its most fertile agricultural land to construction, and LE50 billion is needed to reclaim them, said Cabinet Spokesperson Nader Saad.

Madbouli also announced that, following a cabinet meeting on 16 February discussing the subject, the bread subsidy system will be reviewed. He pointed out that ration card holders can purchase a loaf of subsidised bread for five piastres, a price that has remain unchanged for 30 years. The Ministry of Supply is currently studying the best way to rationalise the subsidies, and a new system — likely to include gradual increases in the price of a loaf — will be announced soon.

On securing a more balanced relationship between tenants and landlords, Madbouli said the government is coordinating with the House of Representatives and the Senate in a bid to draft a new law. “This is one of the complex problems we inherited from previous governments and we need to solve it. Rents cannot remain unchanged for 50 years,” he said.

Cabinet Spokesperson Saad revealed that a joint parliamentary-government committee has begun meeting to amend the existing landlord-tenant relationship law.

“When this law was passed in 1969 it effectively froze rents,” said Saad. “Even after it was amended, first in 1977, and then again in 1981, the results were nominal increases in rent, which since 1981 have remained unchanged.”

On Monday, the House of Representatives approved a government-drafted law aimed at liberalising rents of non-residential units. The draft law will give tenants of non-residential units a five-year grace period from the date of its promulgation to adjust, after which rents will increase five-fold. For the following four years, they will then be increased by 15 per annum.

*A version of this article appears in print in the 24 February, 2022 edition of Al-Ahram Weekly.

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