In Egypt, soaring bread prices put Cairo on alert

In Egypt, where sourdough bread was born 5,000 years ago, pita remains a staple. It comes out of the oven at dawn to be sold on every street corner. Round and flat, it is eaten with tomatoes and cucumbers. Its distribution, heavily dependent on state aid, allows two-thirds of Egypt’s 105 million people to benefit from a subsidized rate.

But its price, unchanged since 1988, has just quadrupled in June, taking the price of a 90-gram loaf from 5 Egyptian piastres (0.10 dollars) to 20 (0.42 dollars). Admittedly, this is a paltry sum in euros (less than half a cent), but it is a shock measure for the poorest, especially since until now, the authorities had only reduced the unit weight.

The “Bread Intifada” in Egypt

The financial burden of these subsidies has become too great. Egypt, the world’s largest importer of wheat, is paying more and more for its supplies in the context of the war in Ukraine. On the verge of bankruptcy, the country obtained an $8 billion loan from the International Monetary Fund. But this aid plan has a cost: the Egyptian authorities have agreed to let their currency float and raise interest rates to attract investment.

The population is coping for now, but the issue is potentially 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” to demand the departure of President Mubarak. And in 2017, in Upper Egypt and the Nile Delta, the decision of the Ministry of Supply to cut rations sparked new protests.

60% of the population lives in poverty

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

Ahmed Kouchouk, a former World Bank official and chief negotiator at the IMF in recent years, has been appointed to the Finance Ministry. The Investment and Foreign Trade Ministries, as well as the Oil and Supply Ministries, also have new leaders.

To continue helping the most disadvantaged in a country where the poverty rate reached 60% in 2023, the executive wants to provide cash aid to the most vulnerable families rather than subsidizing basic necessities, a plan that does not meet with the approval of Egyptians.