Egypt Considers Shift to Cash Subsidies in Effort to Reform Economical System
President Abdel Fattah al-Sisi's forum in Egypt has initiated discussions on transitioning from food product subsidies to direct cash payments, a move that could potentially revolutionize the country's subsidy program. Economists believe that this shift could lead to a more efficient allocation of resources.
Egypt currently spends a significant amount of its budget on direct subsidies, with a large portion allocated to food products. Millions of people benefit from discounted prices on essential items like pasta, vegetable oil, sugar, and bread. However, the government acknowledges that the current subsidy system is unsustainable and fails to effectively support the most vulnerable members of society.
The International Monetary Fund has also highlighted the need for Egypt to reduce untargeted subsidies in order to prioritize social protection and human capital development. President Sisi established the National Dialogue in 2022 to facilitate policy discussions and recommendations within government constraints.
While the forum's recommendations have not been fully implemented, there are indications that the government is committed to subsidy reform. Cash subsidies could potentially provide greater assistance to those in need, but clear criteria and inflation adjustments would be essential for effective targeting.
With around 60% of Egyptians living near or below the poverty line, the outcome of these subsidy reforms could have a significant impact on the population. It is crucial for individuals to stay informed about these developments and understand how they may affect their lives and finances.