Egypt’s Prime Minister Mostafa Madbouly highlighted the significant state support allocated to five key sectors, totalling a staggering EGP 342bn annually.
This came as the Egyptian government kicked off the new year with price hikes on a range of essential services, in a bid to bolster revenue and potentially secure a larger rescue package from the International Monetary Fund.
Speaking at a Cabinet press conference on Wednesday, Madbouly emphasized the crucial role these subsidies play in providing Egyptians with basic necessities.
“Every morning, even before sunrise, countless bakeries across the country churn out 275 million loaves of bread daily,” Madbouly explained. “That translates to a staggering 100 billion loaves per year, with the state shouldering a substantial portion of the cost.”
The Prime Minister elaborated on the specific subsidy figures for each sector:
- Bread: EGP 91bn annually, compared to less than EGP 50bn before 2021.
- Petroleum products: EGP 90bn, supporting each of the 18 billion litres of diesel consumed in Egypt with EGP 5.
- Basic supplies: EGP 36bn,
- Cooking gas cylinders (280 million consumed annually), are currently sold at a significantly subsidized price of EGP 75 compared to the actual cost of EGP 200.
Electricity prices also saw significant adjustments, with increases ranging from 16% to 26% for households depending on usage, and around 20% for industries. Madbouly provided detailed breakdowns of the revised tariff brackets, emphasizing that all consumer segments still pay less than the actual cost of electricity to the state.
“We carefully considered various scenarios before implementing these price adjustments,” he said. “The goal is to find a sustainable path forward, balancing the need to reduce subsidies with minimizing the impact on citizens. We ultimately opted for a five-year phased approach to spread the burden and ease the transition.”
“The first segment from zero to 50 kilowatts was charged EGP 0.48, and we increased it to EGP 0.58, which means EGP 0.10, and so on,” Madbouly elaborated. “These segments that increased at the beginning of the month represent 65% of the Egyptian people.”
Madbouly acknowledged the challenges of navigating the current economic climate. He pointed to rising global interest rates, making borrowing more expensive, and highlighted the government’s past efforts to postpone inevitable price hikes.
“It is impossible for any country or budget to continue increasing debt and borrowing,” the Prime Minister declared.
