Egypt considers subsidy reform to address rising costs
Egypt’s Prime Minister Moustafa Madbouly revealed plans to overhaul the subsidy system, aiming to optimise budget resources by re-evaluating bread, electricity, and fuel prices in response to soaring global wheat and oil costs, the Cabinet reported.
In televised remarks, Prime Minister Moustafa Madbouly outlined the following:
- Bread subsidy: The Prime Minister acknowledged the significant jump in international wheat prices from $270 to $549 per ton due to the Russia-Ukraine war.
He emphasised that the current bread subsidy programme, costing 115 billion Egyptian pounds in the current budget, will not be eliminated, but prices will be adjusted.
- Electricity subsidy: Rising global oil prices, from $85 to $87 per barrel, are also impacting electricity costs.
The production cost of electricity is 2.23 Egyptian pounds per kilowatt/hour, while subsidised electricity is sold to consumers at 0.58 Egyptian pounds per kilowatt/hour.
- Fuel subsidy: Diesel subsidies are expected to continue beyond 2025, but gasoline prices will be revised.
The Egyptian government is considering a transition from in-kind subsidies to a cash subsidy system as a means to conserve foreign currency and reduce budget deficits.
Notably, the authorities are actively engaging the public in discussions regarding this shift, as per the statement.
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