–  Egypt will raise the price of heavily subsidized bread for the first time in decades, increasing it by 300% to 20 piasters ($0.0042) per loaf starting in June, affecting two-thirds of the population who rely on this subsidy.

–  This decision follows a significant currency devaluation and a shift to a flexible exchange rate system in March, amidst an easing inflation that had surged to record levels last summer. The government is also exploring a transition to conditional cash subsidies for bread.

–  Despite the price hike, Egypt’s wheat import quantities will remain unaffected, with imports rising to 10.88 million metric tons in 2023. The finance ministry has allocated substantial funds for bread and petroleum subsidies in the 2024/2025 budget, amounting to approximately 125 billion Egyptian pounds ($2.66 billion) and 147 billion pounds, respectively.

Egypt, the world’s largest wheat importer, will raise the price of heavily subsidized bread for the first time in decades.

Prime Minister Mostafa Madbouly announced at a press conference that the price of subsidized bread will increase by 300% to 20 piasters ($0.0042) from 5 piasters starting in June.

Approximately two-thirds of Egypt’s population benefit from a program that provides 5 loaves of bread daily for 5 piasters each.

The announcement follows Egypt’s significant currency devaluation in March and its shift to a flexible exchange rate system. Inflation surged to a record high last summer and has slightly eased since then.

“We fully understand that raising the price is a thorny issue, and many past governments avoided it,” Madbouly said. “But today, we see the size of the subsidy bill on the Egyptian state, and we had to make a minimal move to ensure the sustainability of the service.”

Madbouly mentioned that the government is considering transitioning to conditional cash subsidies for bread.

After experiencing chronic foreign currency shortages for two years, Egypt secured significant funding from the IMF, the UAE, and other entities since late February. The new price covers 16% of the cost of producing the bread, which has increased to 125 piasters from 115 last year, according to Supply Minister Ali Moselhy.

The finance ministry announced in March that it would allocate around 125 billion Egyptian pounds ($2.66 billion) for bread subsidies and around 147 billion pounds for petroleum product subsidies in its 2024/2025 state budget.

Egypt imported approximately 10.88 million metric tons of wheat in 2023, up 14.7% from 9.48 million tons in 2022. Moselhy assured Reuters that the price increase would not affect the quantity of wheat the state imports.