IN A MOVE aiming at reducing Egypt's wheat imports by 10 per cent at least, a new mechanism for the bread subsidy system came into effect on Tuesday obliging bakers to pay the market price upfront for the flour they use to make subsidised bread. Bakers are later compensated for the difference between the cost of manufacturing a loaf of bread and its subsidised sale price. Bread is sold at LE0.05 per loaf to ration-card holders regardless of the cost of production, whereas at market rates the same loaf cost LE0.39 last year. This year the cost stands at LE0.53, and with increases in fuel and electricity prices it could go up to LE0.6. The new mechanism aims to cut down on the misuse of subsidised flour and prevent corrupt bakeries from selling it on the black market. This will save the government LE8 billion from its food subsidies allocation for the fiscal year 2017-2018.
