In Egypt, exploding bread prices put Cairo on alert

In Egypt, where sourdough bread was invented 5,000 years ago, pita remains a staple food. It comes out of the ovens at dawn and is sold on every street corner. Round and flat, it is eaten with tomatoes and cucumbers. Its distribution is heavily dependent on government subsidies, so two-thirds of Egypt’s 105 million people benefit from a subsidized price.

But the price, which has remained unchanged since 1988, quadrupled in June. A 90-gram loaf of bread now costs 20 Egyptian piastres ($0.10), or $0.42. This is a ridiculous amount in euros (less than half a cent), but it is a shock for the poorest, especially since the authorities had previously only reduced the weight per loaf.

The “Bread Intifada” in Egypt

The financial burden of these subsidies has become too great. Egypt, the world’s largest importer of wheat, is having to pay more and more for its deliveries in connection with the war in Ukraine. On the verge of bankruptcy, the country received an 8 billion dollar loan from the International Monetary Fund. But this aid plan comes at a price: the Egyptian authorities have agreed to float their currency and raise interest rates to attract investment.

The population is taking it in stride at the moment, but the issue has the potential to be explosive. In 1977, the “bread intifada” forced President Sadat to reverse his subsidy reforms. In 2011, hundreds of thousands of Egyptians took to the streets with the slogan “Bread, justice and dignity” and demanded the resignation of President Mubarak. And in 2017, the Ministry of Supply’s decision to cut rations sparked renewed protests in Upper Egypt and the Nile Delta.

60% of the population lives in poverty

A change of government was necessary to signal that the difficulties would be tackled head-on. A new prime minister, Moustafa Madbouli, was tasked with forming a government, which was presented on July 3. Twenty of the thirty ministers were replaced, some by technocrats.

Most notably, Ahmed Kouchouk, a former World Bank employee and chief IMF negotiator in recent years, has been appointed Finance Minister. The Ministries of Investment and Foreign Trade and of Petroleum and Utilities also have new heads.

To continue helping the poorest in a country where the poverty rate reached 60 percent in 2023, the government plans to provide financial support to the neediest families instead of subsidizing basic products – a plan that is not popular with Egyptians.