'An inevitable famine': Egypt to slash bread subsidies, prices increase by 400%

'An inevitable famine': Egypt to slash bread subsidies, prices increase by 400%
Egypt is the world's largest wheat importer and projected to import 12 million tons of wheat, up from 11.2 million the previous year.
4 min read
Egypt - Cairo
30 May, 2024
Egypt's poor and limited-income households may no longer be able to secure their daily needs of bread after the cut of subsidies. [Getty]

Egypt's poor and limited-income households may no longer be able to afford basic food requirements after bread subsidies are set to be slashed next month.

During a televised press conference held on Wednesday evening, 30 May, Prime Minister Moustafa Madbouly said the subsidies of the Egyptian flatbread will be reduced. Madbouly also said that there are attempts by authorities not to impact the poor, in a country where almost one-third of the population of nearly 105 million is under the poverty line and suffering from malnutrition. 

"The state will continue offering subsidies…but we are limiting them due to the rising cost of wheat [mostly imported]," the Egyptian PM said.

Egyptians nationwide have earlier this week voiced their outrage as the hashtag "subsidised bread" has gone viral for days following President Abdel Fattah al-Sisi's public talk on cutting the subsidies, also of petroleum products and electricity.

A total of 20 loaves of the popular Egyptian "balady" bread currently cost 1 EGP, a price to be raised four times, which, according to Madbouly, has been fixed since 1988.

In doing so, a pound will secure a poor citizen only five loaves. An Egyptian pound (about US$0.021) consists of 100 piasters.

Egypt is the world's largest wheat importer for the fiscal year 2023/2024 and is projected to import 12 million tons of wheat, up from 11.2 million the previous year.

Official data refuted

Meanwhile, the local fact-checking news site Saheeh Masr refuted Madbouly’s statements on the actual cost of bread for reportedly being "inaccurate and misleading." 

"Madouly said that the price of a loaf has not been raised in over 30 years, which is misleading. Even though it remained at 5 piasters, the weight of a loaf has been reduced since then from 150 grams to 130 grams to currently reach 90 grams," the fact-checker said in a post on X, previously known as Twitter.

The fact-checker further argued that bread subsidies have not been costing the state 120 million Egyptian pounds, as claimed by Madbouly.

"As per the officially declared state’s general budget for the fiscal year 2023/2024, the cost of a loaf is less than one pound," Saheeb Masr said.

Egypt has been undergoing the most challenging economic crisis in modern history, with inflation hitting a record of nearly 35 per cent. Food prices have become too expensive for poor and average-income households, especially animal protein, milk, rice and cooking oil.

The country's external debt soared by 5.1 per cent during the fourth quarter of 2022, reaching US$162.94 billion, a total of US$10 billion more than the previous quarter.

A revolt on the horizon?

The recent measures are expected to provoke unrest in a country where millions of citizens had about 12 years ago revolted against dictatorship and declining living conditions.

Sisi has over the years repeatedly blamed the current economic ordeal on the 25 January Revolution of 2011, which ousted late long-time autocrat Hosni Mubarak, at a time when economic experts pinned the crisis on the government’s mismanagement.

Such mismanagement has arguably contributed to Egypt's current predicament, with Sisi's government investing in "white elephant" projects such as the New Administrative Capital, which cost Egypt about US$60 billion.

The economic crisis has further led the government to, arguably, seek an easy way out and sell state assets to rich Gulf nations to secure the country's needs for foreign currencies amid a dire shortage witnessed for months.  

In March this year, the International Monetary Fund (IMF) extended Egypt's loan programme to US$8 billion, first initiated in 2016, shortly after the country officially implemented a flexible exchange rate of the local pound against the US dollar.

In return, Egypt is committed to implementing certain conditions such as liberalising the exchange rate, gradually abolishing subsidies on basic commodities, and significantly reducing the number of those employed by the government in public administration

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Back in 1977, during the reign of late President Anwar Sadat, Egyptians revolted against the rising prices of basic goods, including bread and refined sugar, a movement dubbed by the media as 'the bread uprising' and by the then-head of state as "the thieves' uprising."

Decades later, bread remained a part of the slogan adopted during the January 25 Revolution: "bread, freedom and social justice."

The looming question now is whether history will repeat itself.

"The slogans of the 1977 brief uprising sounded resembled those of the January revolution. Even after laws were imposed over the past decade that allowed the authorities to quell protests, people are still expected to eventually revolt," a prominent socio-economic expert told The New Arab on condition of anonymity for security reasons. 

"It is no longer a matter of freedom or civil liberties. People are about to reach the critical point of not being able to secure the very basic needs for their children," added the expert. "Without cheap bread, impoverished Egyptians will likely face an inevitable famine…and I don’t think the regime is ready to confront hungry masses who have nothing to lose."