Egypt to start rationing subsidised bread: Minister

CAIRO (REUTERS) - Egypt plans to start rationing subsidised bread, a minister said on Tuesday, restricting supplies of cheap loaves upon which many Egyptians depend as the cash-strapped state tries to curb spending.

Dr Bassem Ouda, the minister of supply and internal trade, said the government would start implementing the system "after two months". Trials of the rationing system using electronic smart cards would begin in the cities of Port Fouad and Port Said.

Food supply is a politically sensitive issue in Egypt, where rising prices are being passed on to struggling consumers and shortages have provoked unrest in the past. Curbs on bread subsidies triggered bread riots in 1977.

The cheapest subsidised loaves are sold for 5 piastres, or less than one US cent. There are currently no controls on how many Egyptians can buy.

Dr Ouda told the state news agency MENA that subsidised bread and cooking gas would be added to the list of staples made available to Egyptians below market prices under a state rationing system. The government has already said it would use the smart card system to ration motor fuel from July.

With the economy weakened by two years of political turmoil, Egypt is under pressure to curb a subsidy bill that accounts for about a quarter of state spending, although the bulk is for fuel rather than food.

Cutting subsidies is seen as vital for the government to secure a US$4.8 billion (S$6 billion) loan from the International Monetary Fund, which held talks with the government this week.

"Cooking gas and bread will start to be distributed using smart cards after two months," Dr Ouda said, adding that this would follow the tender to pick a smart card supplier.

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