Wednesday 23 August 2017

Egypt Extends Cost-Cutting Effort to Applicants for Food Rations

Egypt Extends Cost-Cutting Effort to Applicants for Food Rations
(Bloomberg 08/09/17)
Egypt Extends Cost-Cutting Effort to Applicants for Food Rations

Egypt tightened access to a costly rations program on which the majority of the population relies, the latest in a series of painful and politically-sensitive measures seeking to repair public finances and restore investor confidence.

The decree unveiled Tuesday restricts access to new ration cards to people earning 1,500 pounds ($84.50) a month or less for applicants in the public or private sector, the Supply Ministry said in a statement. Lower caps apply to other segments of the population, including pensioners, and the total number of family members covered under the same card was set at four -- with no option to add additional names after the card is issued.

It’s the latest effort by the government to cut spending and curb subsidies as its pushes ahead with International Monetary Fund-backed measures to boost growth and attract investment, which dried up following the 2011 uprising against President Hosni Mubarak. The government forecasts the budget deficit to fall to about 9.1 percent of gross domestic product this fiscal year, from about 10.5 percent.

The new measures do not affect people who already hold food ration cards, which subsidize goods for more than 75 percent of the nation’s 93 million residents. This year’s budget includes almost $2.5 billion in tax cuts, bonuses and increased pension payments -- funds that are aimed at offsetting the impact of rising prices.

Inflation has soared above 30 percent since the pound was floated in November, further burdening a nation where nearly half of the population lives near or below the poverty line. President Abdel-Fattah El-Sisi, in the final year of his first term, has urged Egyptians to be patient with the reform process he described as a painful necessity to achieve long-term economic stability. Read more at: https://www.bloomberg.com/news/articles/2017-08-08/egypt-extends-cost-cu...

By Tarek El-Tablawy and Ahmed Feteha

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