The National Dialogue in Egypt – a forum launched by President Abdel Fattah El-Sisi – began on Monday to discuss a possible shift in the support system towards direct cash support instead of providing food products at reduced prices, a system that many economists say may be more efficient.
Any measure towards cash support will be of great importance after the government has provided subsidies for bread and other basic goods for most of the population for decades.
Previous attempts to reform this politically sensitive program have led to protests.
Egypt spends about 370 billion pounds ($7.6 billion) on direct support, according to the 2024/2025 budget statement, with 36% of it going to support food.
More than 60 million people can buy basic foodstuffs – such as pasta, cooking oil and sugar at reduced prices – while at least 10 million others benefit from the huge bread subsidy system.
Al-Sisi and senior ministers have criticized the current support system for months, saying that it does not benefit the most vulnerable groups while imposing a heavy burden on the state’s public finances.
In a statement to Extra News channel on Monday, Minister of Supply Sherif Farouk expressed his hope that the cash support system will be implemented nationwide at the beginning of the new budget.
The minister explained that the program will be implemented gradually and experimentally in selected areas before it is fully rolled out.
Last August, the International Monetary Fund – which is implementing a new support program worth $8 billion with Egypt – said that reducing non-targeted support would provide more space for social protection and human capital development.
Sisi announced a national dialogue in 2022 with the aim of conducting a political debate and coming up with recommendations within limits set by the state.
The government did not implement many of the National Dialogue recommendations, but former minister and National Dialogue Council member Judah Abdul Khaleq said the support discussion indicated the government intended to move forward with reform.
Abdel Khaleq said, “It seems that the government already has a premeditated intention to switch from in-kind support to cash support, which means that resorting to the national dialogue is primarily aimed at obtaining blessings or beautifying the decision by inferring that it is the decision of the economic experts and not (not) the government.”
Yesterday, Sunday, the National Dialogue issued a statement explaining the potential benefits of switching to cash support.
It is estimated that about 60% of Egyptians live below or near the poverty line. Many rely on support as prices rise and the value of the currency declines.
Mohamed Fouad, an economist and professor at the American University in Cairo, told Reuters that monetary support can better target the neediest groups provided there are clear criteria for how to target those groups and link it to inflation.
