Sisi announces cuts to subsidy ration card program

President Abdel Fattah al-Sisi declared on Wednesday that the government might stop issuing new subsidy ration cards to newborns and limit the number of beneficiaries to two family members per card, saying expenditures on the system have held the country back.

“We will no longer give out subsidy cards to more than two people in the old [subsidy card] system, and in the new system, no, nothing,” Sisi said in a speech given at the official opening of a gasoline production complex in Assiut on Wednesday.

Around 70 million citizens currently rely on the subsidy cards to receive key food staples at below-market prices, including bread, rice, pasta and cooking oil at a maximum of four family members per card.

It was unclear precisely how the president’s decision would affect the subsidy card program. At the end of 2016, the government announced a program to reform the system by removing people whose income was determined to be above a certain threshold. Since then, the standards by which people are made ineligible have been repeatedly amended.

Sisi’s announcement came as a surprise to officials, who were uncertain about how the changes would be implemented. Different interpretations of the announcement were presented in the press while officials from the Supply Ministry told Mada Masr that no legal changes to the system had yet been made and that a timeframe is not yet in place.

Existing supply cards, registered before the year 2005, currently cover families with up to four children. Cards are invalidated if any of the registered family members are found to surpass a variety of income-related metrics, including the cost of mobile phone bills and the value of family vehicles.

While people are allowed to register for new cards or add newborns to existing cards, a Supply Ministry official previously told Mada Masr that the ministry has not processed any added newborns to the subsidy system since 2005. Several hours after Sisi’s speech on Wednesday, Supply Minister Ali Moselhi told a news conference that no new ration cards would be issued and that no newborns would be added to the subsidy ration card system. 

“We need to stop the culture of population growth,” Sisi said on Wednesday, “[You have] one child, another, six, without considering how you’re going to pay for them or educate them, it needs to be reined in.”

“When you go past one child,” he continued, “not two children, one child, you put yourself in a dilemma, and that child’s future won’t be, I mean, God didn’t tell us to do that. God didn’t tell us to do something like that to ourselves.”

Going on to talk about how the subsidy system would change, the president said, “no one will be allowed to take out a subsidy card when they get married. You get married, and then you wait for a card when you’re not able to take care of the costs yourself? How is that?”

Sisi described an attitude of “expecting to get something for less than its worth,” calling it a uniquely Egyptian phenomenon. “I wish we were able to [pay for the system],” he said, blaming the “culture” or “custom” as “the reason why the country has been incapable of ‘getting up' for the past years.”

Interpretations of what the president’s comments mean for the government subsidy system varied from newspaper to newspaper on Wednesday. Al-Ahram reported that existing subsidy cards, some of which currently allow the registration of up to four people per household, would be cut down to allow for just two people per card. The privately owned Al-Shorouk newspaper likewise reported that the maximum number of individuals per existing card would be capped at just two individuals and that no new cards would be issued to newly married couples. Bloomberg Asharq, also reported that the ministry will stop issuing supply cards to newly married couples entirely. 

Officials from the Supply Ministry and from Parliament who spoke to Mada Masr on Wednesday were likewise uncertain as to the implications of the president’s statements.

The Supply Ministry Subsidy Cards Department was unaware of the president’s statements before they were broadcast, department director Fawzy Afify told Mada Masr. “These statements turned everything upside down, journalists have all interpreted the speech in different ways and written different things,” Afify said, explaining that the administration is waiting for the executive formulation of the decision to be passed by the Cabinet. “We will not implement words that were said in a conference. We need official documents to understand and then implement.”

Supply Ministry spokesperson Hani Iraqi told Mada Masr that he didn’t know when the decision would be enforced.

Subsidies on household goods and bread amounted to LE87 billion in the state budget for the current fiscal year, with LE51 billion allocated to bread and LE36.5 billion to other goods.

Over the past several years, the government has moved away from a commodity subsidy system toward a cash support system in a bid to curb expenditure. At present, families across the country have subsidy cards that can be used to purchase a variety of household goods including cooking oil, grains and sugar. 

Multiple cuts to the subsidy budget have been introduced since Sisi’s presidency began in 2014, with subsidies on fuel almost completely drawn back under a raft of liberalization policies undertaken in partnership with the IMF since 2016.

This year, the president has commented multiple times on the food subsidy bill, suggesting it represents a burden on state spending. In an August speech, Sisi said subsidies on bread would be cut, but, nearly four months later, the government has not taken any official action to remove or reduce bread subsidies.

The president’s speech and supply minister’s comments on Wednesday also appeared to contradict a recent televised statement in which the latter had said that new supply cards would be capped at a maximum of four people.