EGYPT – In Egypt, the executive has decided to allocate 128 billion pounds (US$4.1 billion) to cover food subsidies in the 2023/2024 fiscal year which starts on July 1, 12% down compared to the US$4.7 billion allocated to it the previous year.
According to Ecofin Agency, the announcement comes in a context where the prices of key subsidized foodstuffs such as vegetable oil, sugar, and rice, have been revised upwards by 20% due to the shortage of dollars currently raging in the country.
According to the executives, apart from support mechanisms for agriculture, aid for the consumption of food products is also an effective means of combating food insecurity in the world.
Egypt, a nation of 105 million people, is one of the world’s biggest wheat importers and also relies on imports of other basic foods and fuel.
While details have not been revealed regarding the distribution of the new budget, the bread subsidy program costs the Egyptian government nearly US$3 billion each year, or approximately 60% of total expenditure on food subsidies.
This is not surprising as Bread is a major staple for the country affecting more than 60 million people, or nearly 57% of the country’s total population
Earlier in March, Ali Moselhy, Minister of Supply explained this price readjustment citing that the lack of foreign currency has led the government to reduce the volume of purchases of certain foodstuffs imported from abroad, such as wheat and vegetable oils.
Currently, the 750ml bottle of subsidized vegetable oil is now traded at 30 pounds ($0.97) from 25 pounds ($0.81) previously while the rate for 1kg packets of sugar and rice has risen from 10 .5 pounds to 12.6 pounds ($0.34 to $0.41).
The finance ministry estimated Egypt would need 8.25 million tonnes of wheat in the coming financial year and budget for an oil price of US$80 per barrel of Brent crude, the document, a financial statement attached to the draft budget approved by parliament.
Egypt is budgeting for revenues of 2.142 trillion pounds ( 2726 trillion) and expects a total deficit of 824.44 billion pounds ( 1049 trillion), or 6.96% of gross domestic product (GDP), according to the document.
The budget, which parliament approved, estimates real GDP growth of 4.1% and an average inflation rate of 16%.
It also estimates that the average interest on government debt instruments will reach 18.5%.