Explainer| How does the new ration system work?
Dressed in a summer outfit and with a luxury yacht behind him, PM Mostafa Madbouly spoke about citizens who have held onto their ration cards for more than 30 years during his recent tour of Beheira governorate. He noted that these cards are being passed down to children without anyone verifying whether recipients still qualify for support, or even how many beneficiaries there are.
This was the prime minister’s way of illustrating just how badly the current system fails to get subsidies to the people who actually need them, and why it requires an extensive overhaul.
Madbouly’s remarks come amid mounting public anger over the exclusion of hundreds of thousands of people from the ration system in recent weeks, anger that has been further fuelled by media leaks suggesting millions of citizens could lose their entitlements under a sweeping restructuring of the nearly century-old system.
According to available information, the government had originally planned to roll out the new system nationwide from the start of the current fiscal year in July. However, a source inside the Ministry of Supply told Al Manassa that officials backed off this timeline, opting instead to run a pilot in Port Said governorate.
So what exactly does the new ration system look like? Is this genuine reform, or austerity dressed up as social protection and another step toward commodifying public services?
What are they cooking up for the ration system?
Social media has in recent days been flooded with posts from citizens who say they discovered, often by accident, that their ration cards had been frozen or that they had quietly been dropped from the lists.
In official statements, the Ministry of Supply has acknowledged excluding 850,000 citizens as of the end of June, describing the move as routine housekeeping based on existing criteria such as owning a luxury car or more than 10 feddans (4.2 hectares) of land.
Alongside these statements, unnamed officials have told the press that the ministry is also applying a new condition excluding anyone whose monthly household income exceeds 24,000 Egyptian pounds (about $480), which they say is the main reason nearly a million citizens have been removed from the subsidy rolls within a few weeks.
The controversy prompted the supply minister to intervene in mid-June to outline the coming changes, the most significant being a rise in the price of subsidized bread from 20 piastres to 1.5 pounds (about $0.03).
How the new system would work
A member of the ministerial committee formed this year to restructure subsidies, who spoke on condition of anonymity, summed up the core of the new system: the state will no longer set the price of goods, only the value of the subsidy each citizen is entitled to, with goods then sold at prices set by the free market.
Under the current system, eligible citizens receive 50 pounds (about $1) per person each month to buy fixed-price subsidized goods, in addition to subsidized bread, from Ministry of Supply outlets. The new system would retain this framework but raise the cash value of the subsidy while letting outlets price commodities according to market trends.
“Once the new system kicks in, protection will be limited to the value of the subsidy alone, while prices of goods move according to supply, demand, and production and import costs,” the committee source told Al Manassa. The stated goal is to curb resale of subsidized goods on the black market and to address other forms of waste, such as the use of subsidized bread as poultry feed.
The minister, in a TV interview, put the value of such waste at around 35 billion pounds ($700m), or 20% of this year's total subsidy budget of roughly 178 billion pounds ($3.56bn).
The minister also argued the new system benefits cardholders: a household that does not use its full bread allowance currently receives 10 piastres in credit per loaf skipped; under the new system, this credit would rise to 1.5 pounds per loaf. He described the new system as a healthier alternative, saying the current one encourages excessive bread consumption, while the new one would introduce goods not previously available — including eggs, ghee and chicken — chosen to give subsidized households a more balanced diet.
Who receives the subsidies?
The new eligibility criteria, particularly the income threshold, remain among the most contentious elements of the plan. Economist Sherine Al-Shawarby, a former assistant to the finance minister, questioned how the government could reliably identify and remove households earning above the threshold, given that the state holds reliable income data only for public-sector employees, with no solid insight into private-sector earnings, formal or informal.
Al-Shawarby told Al Manassa that some criteria fail to reflect the economic pressures people currently face, pointing to the rule excluding owners of cars worth 1 million pounds ($20,000) or more. “Many such owners bought their cars on installment plans specifically to drive for ride-hailing apps as a way of boosting income. This sum is no longer large by current car-market standards,” she said.
A former government official familiar with discussions on the reform said the government was aware blanket exclusions could cause problems, and was therefore considering a points-based eligibility score under which no single indicator would trigger automatic exclusion. “Instead, a household’s overall economic situation would be assessed holistically, reducing the risk of excluding otherwise-qualifying families based on one metric,” he told Al Manassa.
What’s the cash subsidy actually worth?
The supply minister has so far declined to specify the new subsidy amount, saying it remains under study, though leaked figures put it at 300 pounds per person, up from the current 50. He also has not specified how much prices for subsidized goods might rise, while stressing that current subsidies are substantial: he said the existing 50-pounds allowance buys a bottle of oil, a kilo of sugar and a bag of pasta that would cost over 95 pounds at market prices, and cited sugar priced at 12.5 pounds subsidized against 28 pounds on the free market.
The former official said final prices for subsidized goods have not yet been set, with the government seeking to shift prices closer to market levels while avoiding sudden spikes for dependent families.
The minister pitched the new system as a healthier alternative, too
Alia El Mahdi, former dean of Cairo University’s Faculty of Economics and Political Science, told Al Manassa that cash subsidies are useful but can lose their value amid runaway inflation. “A household receiving 1,200 pounds in cash support would need 900 pounds of that just to cover the new cost of bread. Is what’s left really enough to cover the rest of their food needs?”
Egyptians have lived through unprecedented inflation over the past five years, alongside repeated sharp drops in the local currency against the dollar. The US war on Iran only reignited that inflationary pressure, driving up energy costs and pushing the dollar exchange rate even higher.
Al-Shawarby points to the danger of keeping the cash subsidy fixed while inflation climbs, a trend that has already played out. The subsidy was raised to 50 pounds in 2017 and has remained at that level ever since. “The real problem is that the subsidy’s value is continually eroded by high inflation and periodic price hikes,” she says.
A new ration system
Salma Hussein, a researcher at the Egyptian Initiative for Personal Rights, argues that the current subsidy system does need reform, but recommends changes whose primary aim is protecting people, not just saving the government money.
Using bread as an example, Hussein tells Al Manassa that while the government could liberalize the price of wheat and flour for mills and bakeries to prevent smuggling and waste, the final price of a loaf must remain fixed to protect consumers. “There is no need to raise the price of bread in the name of directing subsidies to those who deserve them,” she says, adding that anyone standing in a bread line is, by definition, in need of support.
She also highlights the need to incorporate new commodities into the ration system, particularly butane gas cylinders. These cylinders are currently subsidized through the Ministry of Petroleum, which lacks the Ministry of Supply’s established framework for targeting eligible beneficiaries. Consequently, a significant portion of the subsidized cylinders is diverted to tourist restaurants at the subsidized rate.
Regarding eligibility criteria, Hussein argues that state policy must extend beyond merely removing unqualified individuals from the system. She stresses the need for a formal appeals mechanism to ensure that eligible beneficiaries are not wrongly excluded. Furthermore, she notes that the system must remain open to new applicants rather than freezing enrollment for future generations who require equivalent social protection.