Back to the complete issue
Monday, 12 November 2018

Egypt could cut citizens earning more than EGP 7,000 per month from subsidy rolls

Gov’t could cut citizens earning more than EGP 7,000 per month from welfare rolls: There is a “direction” within government to cut Egyptians earning more than EGP 7,000 per month from the nation’s subsidy rolls, Supply Minister Ali El Moselhy said at a meeting with the House Legislative Committee yesterday, Al Masry Al Youm reports. According to El Moselhy, the EGP 7,000 figure — which Bloomberg notes is double the average monthly wage — is not final and that the wage cap the government settles on will take into consideration expenses such as electricity consumption and taxes. There are currently some 1 mn ration card holders who clearly do not need to rely on food subsidies, the minister said.

Trial balloon as ministry takes to the airwaves: The ministry is in the process of removing high-income citizens from the ration card system, Assistant Supply Minister Ibrahim Ashmawy told Al Hayah Al Youm’s Lobna Assal last night (watch, runtime: 1:05). The process should eliminate some 4-6 mn moochers from the country’s subsidy rolls, he predicted (watch, runtime: 1:36).

Is the switch to cash subsidies coming next year? The Supply Ministry has reportedly formed a committee to determine the price of subsidized bread loaves as it looks to begin switching to a cash subsidy system as early 1Q2019, ministry sources said. The news comes after El Moselhy met last week with bakers of subsidized bread to look into a new system whereby subsidy recipients would receive cash handouts, rather than points on their ration cards with which to purchase bread.

How the system works today: The ministry last looked at changing bread production prices in March. The new system could introduce a separate card specifically for subsidized bread. Subsidy card holders are currently given EGP 50 per family member each month to purchase commodities, in addition to each member being allotted five loaves of subsidized bread per day. Surplus bread points can be used to buy other commodities through subsidy vendors.

Background: Overall spending on commodity subsidies is set to rise 36.6% this fiscal year to EGP 86.18 bn. The government has been considering since July reworking eligibility conditions for the commodity subsidies system as it focuses on reducing the number of beneficiaries that receive subsidized commodities and raising the number of those eligible for bread subsidies instead during FY2018-19.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.