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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.

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