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Abstract
Egypt has a large food subsidy program that has created a relatively effective social
safety net, but it has also drained budgetary resources and proved to be poorly targeted
toward the poor. Discussions about reforming the system to improve its effectiveness
have run into extreme political sensitivities surrounding the issue of food subsidies. Egypt,
therefore, well illustrates the quandaries that policymakers and others contemplating food
subsidy reform face in developing countries. This study examines the political economy of
food subsidy reform in Egypt and discusses the economic and political advantages and
disadvantages of nine possible reforms. The study concludes that the reforms that have
the greatest chance of success are those that reduce the access of the wealthy while
increasing the access of the truly needy, but the timing, sequence, and trade-offs of such
reforms have to be taken into account before they are implemented.