CAIRO: Minister of Supply Khaled Hanafy announced that a pilot scheme of the new government smartcard subsidy system for bread was launched Saturday in Egypt’s Suez Canal city of Port Said, according to Al-Shorouk newspaper.
“The smart card-based system is similar to a cash transfer system where each card includes the number of points per family member and each commodity will be worth a certain number of points,” said Hanafy.
Currently, holders of ration cards are allowed to obtain a monthly amount of commodities, including tea, sugar, oil, soap and rice, while there are no restrictions on the amount of subsidized bread.
The new smart card system is based on a monthly share of 150 loaves per family member that could be obtained through the subsidy ration cards, said Hanafy during his Saturday visit to Port Said.
“Eligible citizens can obtain their share of bread at any time in the day from any bakery throughout Egypt,” said Hanafy.
Hanafy added that the ministry would also make smartcards available for citizens so they could save points to be used in exchange for other commodities, including rice, beans, lentils, and other appropriate items.
A subsidized loaf of bread in Egypt is currently worth five piasters and weighs 90 grams.
“If a family’s need for bread is below the fixed amount, the family can still use the difference of points to meet other needs for free,” said Hanafy.
Attempts at a rationing system using electronic smartcards began during the one year tenure of ousted President Mohamed Morsi, but due to continued political unrest it was not completed.
The new system is based on the liberalization of flour prices that would be sold to bakeries at the market price, spokesperson for the Ministry of Supply Mahmoud Diab said on CBC TV Saturday.
“The government will purchase loaves of bread from bakeries at the price of 34 piastres (U.S. $0.04 cents) each before selling them to consumers at 5 piastres ($0.01 cent) each,” said Diab.
During the last three years of Mubarak’s rule Egypt witnessed several bread riots and the government has often blamed bakeries for selling subsidized flour on the black market rather than using it to produce subsidized bread.
“Due to the lack of government surveillance on bread distribution, profiteers have exploited the old system and fed their livestock and animals with bread because it is cheaper than animal feed,” said Hanafy.
“The new system will put an end to smuggling flour and will reduce the ordinary long queues seen daily in front of bakeries,” said Hanafy, who added that the new system will create a competitive atmosphere among bread sellers to produce good-quality bread.
Egypt, with its large population of over 85 million people, is the world’s largest importer of wheat, purchasing around 10 million tons a year while the state budget for bread subsidies is worth 22 billion EGP a year, according to a 2013 report by the European Bank.
Bread is the most important subsidized food commodity in Egypt, accounting for almost 70 percent of the cost of Egyptian food subsidies, according to the 2010 official report issued by The World Bank.
Due to the poor state of the economy over the past three years of political turmoil, the Egyptian government is keen to reduce its subsidy bill, including oil and bread accounting for around 25 percent of the state’s spending and 10 percent of its GDP.