Resumen de Food subsidy or cash transfer: Impact of the food subsidy reform on Egyptian households
The Egyptian food subsidy system plays an important role in providing basic goods at low prices, to households, especially the poorest ones. However, the system has been through different reforms to decrease its cost and improve its targeting efficiency. This paper studies the impact of removing the rationed subsidized products and replacing it by cash transfers. Using the Egyptian Integrated Household Survey (HEICS – 2010/2011), a mixed demand model is used to estimate the own price, cross price and income elasticities. The estimated elasticities are used to compute the impact of the suggested reforms on households’ welfare, measured by their food expenditures. The results show that the removal of subsidies will lead to an increase in the expenditures on free market goods for all income groups at both urban and rural areas, especially for the two lowest quintiles.
