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Thursday, 13 July 2017

Supply Ministry to halt subsidizing flour for subsidized bread

Supply Ministry ends subsidies of flour: The Supply Ministry announcing yesterday it will stop subsidizing the flour it provides to bakeries that produce subsidized bread as of next month, and will limit its subsidy provisions to the actual bread produced, Al Masry Al Youm reports. The move is aimed at curbing wheat subsidies fraud that has cost state coffers mns each year, and will drive down wheat imports — which reached 6.2 mn tonnes this year— by around 10%, according to ministry spokesman Mohamed Sewed. The new system will “remove the incentive for smuggling flour, cutting down on waste and helping to save the state up to [EGP 8 bn] from its 2017-18 food subsidy bill,” Sewed said, according to Reuters.

The decision comes days after the ministry moved to raise the cost of bread production to EGP 180 per sack of flour, up from EGP 160 (each sack of flour yields 1,250 loaves). Under the new system, the ministry will use the electronic bread point system to disburse the subsidy based on the final tally of loaves sold at each bakery, taking into account the new price of production.

The ministry was quick to reassure citizens that the move would not affect the selling price of bread, which is currently sold at EGP 0.05 per loaf, according to Youm7. Citizens receive each loaf of bread at less than 10% of its production cost.

Clerics helping out with the reform agenda? Dar Al Ifta is also doing its part to help the state’s efforts to stop black market trading of subsidized goods, issuing a statement yesterday saying that doing so “constitutes harm to and aggression on those who deserve them and public funds,” Gulf News reports. The edict comes as the government is also working to overhaul the subsidy card system and purge it of moochers as part of economic reforms currently being implemented, the website notes.

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