Egypt curtails access to subsidized food as part of reforms

By MENNA ZAKI Markets Associated Press

Egypt on Wednesday curtailed access to ration cards used by three-quarters of the country's 93 million people to buy subsidized food items — the latest in the government's ambitious economic reform plan.

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Under a government decree, which was published in the official gazette on Tuesday, people earning more than 1,500 Egyptian pounds (about $84) a month would be excluded from getting ration cards. Beneficiaries were also limited to families with up to four members. The decree did not make clear what happens to impoverished families with five or more members.

The new ration cards limits will not affect current card holders. Authorities estimate abound 70 million Egyptians are using ration cards. The measures went into effect on Wednesday.

The Egyptian government is looking to bring down its budget deficit to 9.1 percent in the current fiscal year, from 10.9 percent in the previous one by cutting spending and lifting subsidies.

Subsidy cuts have a history of stoking unrest in Egypt but the government has pleaded with the people to brace themselves and endure the tough austerity measures, promising the measures would spur economic recovery and attract foreign investments.

Among the key measures undertaken within efforts to fulfill International Monetary Fund conditions for a $12 billion loan, Egypt devalued and then floated the national currency.

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Earlier this summer, the government raised prices by up to 55 percent for the most-used automobile fuels in the country — 80 octane gasoline and diesel — and doubled the prices of butane canisters used across Egyptian households for cooking. It also raised the prices of electricity by more than 40 percent, as well as drinking water and public transportation charges.

Prior to that, President Abdel-Fattah el-Sissi approved a package of measures benefiting middle and lower class Egyptians, including income tax relief, bonuses for state employees and increases in pensions, in order to alleviate the effect of the price hikes.

Along with the cuts in subsidies, Egypt has also introduced value added tax. The nation's economy has been battered since the 2011 uprising and continues to face major challenges, including a rising Islamic militancy.

The government embarked on the economic reform program soon after el-Sissi took office three years ago.