Egypt considers replacing food subsidies with direct cash payments

Egypt is considering a shift from food subsidies to direct cash payments, as discussed in a forum established by President al-Sisi, Reuters reports. Ending the decades-old system where millions of Egyptians receive staples like bread, vegetable oil and sugar at reduced prices would be a significant move. Egypt currently spends 370 billion Egyptian pounds ($7.6 billion) on subsidies, with 36% allocated to food. Over 60 million Egyptians benefit from the discounted staples, with at least 10 million more benefitting from heavily subsidized bread.

Many economists have criticized the existing system as economically inefficient and argue that cash subsidies could better reach the most vulnerable. The International Monetary Fund, which is lending Egypt $8 billion, supports reducing untargeted subsidies to create more fiscal space for social protection.

Over 60% of Egyptians live near or below the poverty line, and rely heavily on subsidies as a bulwark against inflation.