Egypt Raises Subsidized Bread Price for First Time in Decades

(Bloomberg) -- Egypt raised the price of subsidized bread for the first time in decades, taking aim at a key public-support measure that previous governments had shied away from for fear of stoking unrest.

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The price of a subsidized loaf of bread will rise to 20 piasters per loaf (0.42 US cents) starting June 1, climbing from 5 piasters, Prime Minister Mostafa Madbouly said Wednesday in a televised press conference. Madbouly said the government was also looking at a shift to a cash-payment system instead of the current subsidy program.

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The premier said while the cost of the loaf will remain subsidized, the move was necessary for the government to continue to be able to provide a support network on which the overwhelming majority of the nation’s 105 million people relies.

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Egyptian officials have been gradually lifting state support for several key services, including fuel and electricity. But they had largely steered clear from a direct hike in bread prices — a decision that stoked riots in the late 1970s and forced then-President Anwar Sadat to reverse course.

The decision to curb subsidies is a key part of the government’s push to cut spending after securing $57 billion in investments and aid from the United Arab Emirates, the International Monetary Fund and others as part of a broad economic reform program.

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