Mahasen Khamis sees no problem in welcoming neighbors or relatives who suddenly arrive at her simple home in Ismailia Governorate in eastern Egypt, as long as she has enough tea and sugar to offer hospitality, even if she does not have enough to prepare lunch for her family.

The sixty-year-old woman considers tea and sugar to 'cover the house,' meaning they do not reveal its straitened circumstances. She gets them from her ration share along with her husband and daughter, in addition to three bottles of oil, one or more bags of pasta and noodles, and 45 loaves of bread every three days, which sometimes exceed the family's needs, so she exchanges the surplus for a box of cheese or halva that she eats for breakfast or dinner.

Mahasen, who does not work and whose husband is ill and receives a 'Takaful and Karama' pension, is one of about 61 million Egyptians who receive ration commodities worth 50 pounds per month per person (about one dollar), which provides a bottle of oil and a kilogram of sugar at subsidized prices, since the market price of the two commodities exceeds 80 pounds, in addition to other commodities such as pasta, noodles, and others but at prices close to the market; the cardholder chooses between subsidized and other goods according to his needs.

The ration system includes bread: five loaves per person per day are dispensed as points, which can be exchanged for other goods such as tea, tuna, and cheese if not fully consumed.

Umbrella of protection

This system has provided an 'umbrella of protection' for Egyptian families since its implementation under the late President Gamal Abdel Nasser, according to economist Wael Al-Nahas, and has become akin to an 'acquired right' as he described.

Al-Nahas told Asharq Al-Awsat that the system 'protects the most needy families from market price fluctuations, ensuring they obtain basic commodities without having to buy them.'

However, there is currently a government trend to shift from in-kind subsidies (commodities) to cash subsidies, which entails liberalizing the price of ration commodities, meaning they will be sold at supply outlets at the same market price, with an increase in the value of the subsidy.

Egyptian Supply Minister Sherif Farouk during a field tour (Ministry of Supply)

Prime Minister Mostafa Madbouly attributed the reason for resorting to the system expected to be implemented during the current fiscal year 2026-2027 to the pursuit of 'ensuring that subsidies reach the real beneficiaries, contributing to enhancing social protection and achieving optimal use of state resources,' according to his statements during a press conference on June 24 last.

Egypt's annual inflation rate recorded about 14.3 percent last June, compared to 14.6 percent in May.

Fears of 'Complexity'

Fifty-year-old Samira Ismail (a pseudonym), a resident of a village in Minya in southern Egypt, fears the shift to cash subsidies, saying she does not know whether it will allow her to buy enough basic commodities each month, and she fears entering into complex procedures she does not understand.

Samira, who is illiterate, wakes up early every morning to prepare popcorn and kushari which she sells to children throughout the day. She receives ration for two people: her share and that of her only son who remains with her after her husband left and her six children married and got their own ration cards.

Samira complains about the inadequacy of the ration share, especially as she uses some commodities, such as oil, in her small project.

Subsidized commodities provide protection for Egyptian families from price fluctuations (Egyptian Ministry of Supply)

As for Wafaa Ahmed, who receives ration commodities for four people—herself and her three daughters—she affirms that the commodities help her get through the month and reduce her budget deficit.

Wafaa owns a bookstore selling school supplies in the Gamaleya area in central Cairo, and she spends her profit on her daughters along with her deceased husband's pension. She told Asharq Al-Awsat that cash subsidies might be better for her if they give her the freedom to buy whatever goods she wants according to her needs, but on condition that it increases at rates commensurate with price increases.

Implementation Challenges

The government had announced the removal of about 850,000 ration cardholders who are 'not eligible' through a revision process aimed at restructuring subsidies, excluding those living in a 'compound,' owning a modern car, or having children in private schools.

Economist Al-Nahas points out that the idea of shifting from in-kind to cash subsidies has undergone many discussions and ideas, noting that the matter 'is not without problems, especially with forcing the consumer to buy goods from government supply outlets, making the government a competitor to traders, achieving a profit margin from the subsidy system, and depriving citizens of offers to purchase at lower prices outside its outlets.'

He indicated that the transition is unlikely to be easy.