The political economy of food subsidy reform: the case of Egypt

This paper examines the political economy of food subsidy reform efforts in Egypt. Egypt provides a case of a country with a large food subsidy program that has been relatively effective as a social safety net, but a program that is also expensive and poorly targeted to the needy. Policy discussions about strategies to improve the system's performance run into the extreme political sensitivity of the issue of food subsidies in Egypt. Food subsidies are perceived to be important in promoting political stability and providing some legitimacy to a political system where civil liberties are limited. Egypt therefore illustrates the dilemmas facing policymakers and others contemplating food subsidy reform in developing countries where there are concerns that reform may spark political unrest. This paper argues that even in cases where food subsidy reform is a highly politicized issue, there are still a number of pragmatic policy steps that can be taken that meet the twin goals of reforming the system in ways that better target the poor while functioning more efficiently. (C) 2002 Elsevier Science Ltd. All rights reserved.