Food Subsidy and the Social Assistance Program in Egypt; Targeting and Efficiency Assessment

This study assesses targeting efficiency and effectiveness of the two most important welfare programs in Egypt, the food subsidy program and the Social Assistance Program. The study uses two sources for data: field data for seven governorates in Egypt with the highest poverty ratio, and published data. It finds that the food subsidy program is fairly inefficient in targeting the lower income groups, especially in rural areas. Also, it is not well targeted on the governorates’ level. Upper Egypt governorates with the highest poverty ratios take less food subsidy, as compared to urban governorates with the lowest poverty levels. The study finds, also, that the Social Assistance Program is insufficient to cover the minimum cost of living for the lowest income groups in Egypt, and it is not well targeted on the governorates’ level, given their relative poverty levels. Finally, assessing the impact of in-kind subsidy vis- à-vis cash subsidy on poverty in Egypt, it has been found that in-kind subsidy is preferable to cash subsidy, since with the high inflation rate in the country, the former provides the poor with a set amount of necessary food commodities, while the purchasing power of cash transfers will deteriorate with the rise in prices. However, the distribution system of the in-kind subsidy has to be structurally revised to welltarget the poor and the low-income people in Egypt