EXCLUSIVE- Gov’t looking at how to fund higher spending on commodities for newborns; move is part of expansion of social safety net in El Sisi’s second term. The Madbouly government is debating on how to fund increased commodity subsidies for 6 mn newborns, which the state defines as kids under the age of two, sources tell Enterprise. Three solutions are under consideration to fund an additional EGP 3.6 bn in spending: 1) covering it with a budget overdraft in FY2018-19, 2) re-allocating funds from other ministries or 3) classify the newborns as beneficiaries of programs under the Takaful and Karama social welfare programs. A meeting was held yesterday between the ministers of supply and social solidarity with President Abdel Fattah El Sisi to decide on the solution. Commodity subsidy spending in the FY2018-19 budget is up 36.6% y-o-y to EGP 86.18 bn.

Supply Ministry looking to add EGP 20 to subsidy beneficiaries’ monthly allowance? This comes as the Supply Ministry is reportedly planning to hike the monthly allowance for beneficiaries of various food subsidy programs to EGP 70, from a current EGP 50, unidentified government sources tell Al Mal. The supply and finance ministries are still discussing the feasibility of the increase, according to the sources.

Background: Overall spending on commodity subsidies is set to rise 36.6% this fiscal year to EGP 86.18 bn. With that in mind, the government is looking to cut off moochers and channel more funding to those who need it most. Reports earlier this week suggested the ministers of supply, finance and military production are also reconsidering eligibility conditions for the commodity subsidies system. The government had been expected to focus on reducing the number of beneficiaries that receive subsidized commodities and raising the number of those eligible for bread subsidies instead during FY2018-19. Almost two mn more citizens are expected to benefit from subsidized bread this year — 78.6 mn citizens, up from 76.8 mn last fiscal year. At the same time, only 69 mn people are likely to be made eligible for subsidized commodities, down from 71 mn last year.