Subsidised bread price hike: impact, implications

What is the viability of economic reform programmes if the individual's quality of living continues to fall?

Dina Abdel Fattah

After 24 hours of applying the government’s decision to hike price of subsidised bread by 300 per cent, we surprisingly see a drop in the income of more than 75 million Egyptians. This decline is the result of raising the price of subsidised bread, which is essential for the great majority of the population.

The rise has reduced the pound’s purchasing power to only five loaves of bread, rather than twenty. This is the first hike in subsidised bread prices in over 30 years.

Although the weight of the bread has been reduced several times in the past years from 160 grams to 90 grams, or roughly 40% of its original weight, in an attempt to reduce subsidies without raising prices, successive governments have declined to increase the bread’s price, which has remained a red line that cannot be crossed.

 

Madbouly’s government

 

The Dr Moustafa Madbouly’s government ascribed the increase to the rise in the value of the subsidy offered, with the actual cost of a loaf reaching EGP 1.25, although being sold for just five piasters, pushing the total bread subsidy figure to EGP 120 billion.

According to the Cabinet’s spokesman, the budget of the fiscal year 2024/2025, which begins on July 1, would include 20% increase in subsidy value, hence the government has decided to rationalise the subsidies on some commodities.

 

Legitimate questions

 

The question today is, if the typical individual’s quality of life remains badly impacted, what is the advantage of recent economic reform measures?!

Why does a government that has failed to protect the interests of the poor and working classes continue to exist?

There are numerous more concerns relating to recognising priorities in decision making, transparency, accountability, corruption, and predicting remedies before crises burst.

Also, there are several issues concerning the function of the legislative and executive bodies, and the government’s plans to solve economic and financial problems!

 

Answers we dream of

 

The only answer to the aforementioned questions is the existence of a government capable of crisis management, which will be chosen based on demanding criteria such as high competence, diverse experiences, excellent negotiating abilities, and a solid political and social framework.

We require a proficient administration that operates with well-defined goals and schedules. This entails the necessity for strategic planning and comprehensive studies. Such an administration should not opt for simplistic, direct solutions to crises that burden the citizens. Instead, it should devise various scenarios to tackle challenges effectively.

There is an urgent need for an executive body with full power to be held precisely and decisively by the legislative body. It should be committed to obtaining immediate benefits that principally influence the lives of regular individuals, who should have precedence in its executive actions.

It is normal for a professional administration to anticipate challenges rather than react to them. It makes the best decisions and prioritises the interests of the great majority of people who rely on the state for assistance and protection.

The decision to hike bread prices serves as a case study for evaluating government effectiveness. The present government is undoubtedly aware of the reasons for this choice, which include the state’s responsibilities to foreign creditors, the fluctuation of currency rates, and the considerable rise in subsidy allocations.

Because the government should not have been startled by this knowledge, it might have implemented medium and long-term preventative steps to limit the impact of such a decision. It should have boosted wheat cultivation, arranged price-fixing agreements, and purchased and stockpiled excessive amounts to satisfy expected demand without imposing further cost on citizens.

It would have been preferable to announce this increase at the start of the state’s new budget last year, rather than at random.

 

What ifs

 

The question is what if we had a professional administration that operated independently in accordance with international standards?

I believe that we might have formed our strategies on clear 5-year transparent plans to improve efficiency and competitiveness, support the investment climate attract foreign investors.

If the state had competent executive management, the situation in the governorates would have altered dramatically, allowing for competitive diversity in production and the formation of huge competitive cooperatives appealing to a variety of worldwide investors.

Egypt would now have owned heavy and intermediate industries, allowing it to serve as an export hub for such industries to various African and Middle Eastern countries, as well as take the lead in manufacturing and exporting across the continent, resulting in African-African and Middle Eastern-African integration.

 

Legitimate Dreams

 

If we had an executive authority that could leverage the nation’s competitive strengths. In that case, Egypt could have reclaimed its agricultural prominence. (In the 1940s, Egypt was a global leader in the production of cotton and other crops, and the stock exchanges in Cairo and Alexandria were as proficient and adept at drawing diverse investments as their counterparts in New York and London). Furthermore, civilisation would have permeated every corner of the country, and a decentralised governance system would have fostered success stories and excellence worthy of a land with a 7000-year history of civilisation. Each province, enriched by its cultural heritage and a contemporary vision, would have held a unique global position in manufacturing, investment, and export. This would be driven by a distinct philosophy that lures new generations to reside within its provinces, given the prospect of equal opportunities.

If we had an exceptional executive authority, Egypt could have emerged as the regional hub for global brands across all industrial and service sectors within Africa and the Middle East. The nation would have reveled in boundless export potential and spearheaded logistics initiatives across the Middle East and Africa, boasting the world’s largest free zones and the region’s most extensive packaging industry.

This possibility is attributed to its strategic central location, distinguished by a competitive geopolitical structure. Egypt could have outshone others technologically, shaping the future with hundreds, or even thousands, of global inventions. The country’s youth and entrepreneurs would have recognised their homeland’s value, fostering a culture of belonging and a desire to craft national excellence, especially when they feel the state’s interest in and support for them.

Egypt would have attained specialisation in fishing and many maritime industries, from food and crafts to heavy industries, ships, submarines, and other businesses that characterise coastal communities overlooking important seaports.

This government would have been able to prioritise the preparation of generations of scientists and experts, as well as allocate infinite funds for the creation of minds and the development of their awareness, in order to create generations with distinguished mental and physical skills that will benefit the entire world. Generations capable of sustaining the state’s youth and energy, successfully transitioning from one stage to another, and maintaining its global leadership. Egypt would have emerged as a magnet for worldwide minds and talents seeking to reside in the country and contribute to its civilisational movement and information revolution.

 

Burgeoning history

 

Egypt could have covered the costs of its massive programmes without borrowing. It may have developed into a powerful state capable of reaching self-sufficiency, large surpluses, and prosperity for future generations, as King Farouk did in 1948 when he ordered the closure of the Sukari gold mine owing to the country’s large financial surpluses. He chose to leave a legacy so that future generations would know their forefathers gave them riches.

We require a government capable of resolving issues with solutions that do not impose further responsibilities on its population. A government that tailors its policies to benefit the people. A government that is intelligent and capable of dealing with today’s and tomorrow’s technologies and tools.

We need a government that can restore the local currency’s value so that it may be exchanged for $5, as it was in 1939. We need Egypt to lend the British government a sum equivalent to $25 billion that has yet to be returned. We need Egypt to respond to the United States of America’s demand to offer financial help to both Italy and Greece, as happened after WWII. We must reclaim our leadership as a country that inspired all neighboring countries to declare independence, gained favour with African countries, and contributed to the development of many Arab countries.

This is what Egypt has accomplished in its modern history, and it is what it may do in the near future if it has access to experienced executive management.

dina_afattah@yahoo.com

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