EGYPT – Egypt’s Ministry of Food and Domestic Trade announced that the price of natural gas used for producing subsidized bread will remain unchanged.
As a ministry spokesman, Ahmed Kamal emphasised that “a decree of the Prime Minister of 2020 sets the price of natural gas.”
This decision comes when the country faces significant economic challenges, including rising inflation and increased living costs.
The cost of producing a subsidised loaf of bread in Egypt is approximately 83.7 piasters.
Still, it is sold to consumers for just five piasters, with the state covering about 78.7 piasters in subsidies.
This subsidy system is crucial for many Egyptians, as bread remains a staple food item for millions.
The General Authority for Raw Materials Supply bears the entire cost of this subsidy, which has become increasingly burdensome amid ongoing economic difficulties.
Recent discussions among government officials have highlighted the financial strain on the state due to its bread subsidy program.
President Abdel Fattah El-Sisi noted that the cost of a subsidised loaf to the state has reached 1.25 EGP (US$0.026), leading to an annual subsidy expenditure of around 130 billion EGP (US$2.68 Billion).
He suggested introducing corn into the bread production process to alleviate some financial pressure, stating that mixing corn with wheat could save the state from importing two million tons of grain, which costs approximately US$600 million.
However, this proposal has raised concerns among industry experts and citizens alike. Khaled Fikry, Secretary-General of the Bakery Division at the Federation of Egyptian Chambers of Commerce, expressed surprise at recent government decisions regarding bread pricing.
He stated that “the bread price has remained unchanged since 1988,” questioning why such significant changes were implemented without adequate preparation and stakeholder consultation.
Moreover, Mohamed El-Gezawy, a bakery worker in Giza, expressed apprehension about potential consumer dissatisfaction if prices were to rise.
He explained that many citizens rely on subsidized bread as a primary food source and warned that any increase could lead to unrest.
“The bread loaf is a red line that citizens rely on for their daily sustenance,” he remarked.
Despite these concerns, the government is pressured to manage its finances while ensuring that essential supplies remain stable.
Mahmoud El-Askalany, head of the Citizens Against Price Increases Association, highlighted issues within the subsidy distribution system.
He pointed out that “the mechanism of distributing the subsidy amount allows for theft by some bakery owners,” suggesting that direct distribution through ration cards could be more effective in ensuring that subsidies reach those who need them most.
As Egypt navigates these economic challenges, maintaining the price of natural gas for bread production is seen as a critical measure to support one of its most vital social safety nets.
The government’s approach reflects its broader strategy to balance economic reform with social stability in a country where food security remains a pressing concern.
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