Egypt to raise prices of basic commodities like oil and rice

Egypt is planning on gradually increasing the price of basic commodities distributed through ration cards which are used by more than half of the North African country's population, according to the country's supply minister.

The hikes include a bottle of vegetable oil increasing to EGP 30 ($0.97) from EGP 25 ($0.81), while one-kilogram sacks of sugar and rice will go up to EGP 12.60 ($0.41) from EGP 10.50 ($0.34).

Egypt's population is just under 110 million people and more than 60 million people benefit from a ration card that each household receives. For each household with a ration card, there is EGP 50 ($1.62) per month per person to buy around 32 types of goods at subsidised prices, which include pasta, flour, and fava beans, Reuters reported.

“The hike of subsidised commodities prices distributed through ration cards now force us to review the prices or otherwise the government will not be able to fund or provide these commodities,” Supply Minister Ali El-Mosilhy said at a press conference in Cairo. He added that the review process would start in the coming days.

According to Mosilhy, due to high inflation and a dollar shortage, the Egyptian government deliberately reduced the supplies of some items imported from abroad, such as wheat and vegetable oils. 

Mosilhy also added that the government is considering adopting local currencies between Egypt and other countries with which it trades. Though nothing has been decided yet, there are ongoing negotiations with Russia, China, and India, Bloomberg reported.

The announcement comes as Egypt is facing a foreign currency crunch that has led to a shortage of basic goods and record inflation. Cairo was forced to turn to the International Monetary Fund last year for its fourth loan from the lender in six years.

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And with the sharp rise in food prices, Egyptians are having to pay substantially more to cover their daily needs.

Last month, the IMF wanted to see Egypt accelerate reforms before it carried out its first review of a $3bn rescue programme intended to shore up the North African country's crippled economy.

Ferid Belhaj, the World Bank’s vice president for the Middle East and North Africa, said Egypt was not moving fast enough to address an economic crisis that has sent the cost of basic goods skyrocketing and pushed millions into poverty. 

Egypt's reluctance to move away from a de facto peg of its currency to the US dollar is one of the main holdups. Although the Egyptian pound has lost about half its official value over the past year, analysts say it is still overvalued.

Cairo has tried to implement a series of government initiatives to bring in enough US dollars for import operations and the repayment of accumulating debts.

In March, the country eased its citizenship restrictions for foreigners, declaring that foreigners could obtain citizenship by investing $300,000, rather than $500,000, in the purchase of real estate - including plots of land and buildings owned by the government.