Egypt subsidy reform: Merging cash and commodity support to boost efficiency

Matta Bishay, head of the Internal Trade and Supply Committee at the Federation of Egyptian Chambers of Commerce, has advocated for merging cash subsidies with essential commodity subsidies to improve economic efficiency. This transition toward a “financial wallet” model would allow citizens to purchase basic necessities with greater flexibility based on their specific household needs.

Bishay noted that this model offers several economic benefits for the state, including the rationalization of public spending by directing support more accurately to eligible groups and reducing leakage into informal markets. Additionally, the shift aims to reduce financial waste and lower costs associated with the in-kind subsidy system, such as storage, transportation, and distribution expenses, which helps manage the budget deficit.

For citizens, the system is expected to enhance purchasing power and food security. By allowing families to choose their own goods rather than being restricted to a fixed list, the model supports diversified dietary patterns. Furthermore, savings from reduced consumption of certain items, such as bread, can be converted into financial credit to purchase other essentials like legumes, dairy, and proteins.