Egypt CB Allocates $1.8b for Strategic Goods

Egypt’s central bank has allocated $1.8 billion to ensure six months of reserves in all strategic goods, Supply Minister Mohamed Ali El-Sheikh said on Wednesday, after widespread sugar shortages prompted talk of an impending food crisis.

Egypt already has five months worth of wheat and vegetable oil reserves and would ensure that Egyptians receive a steady supply of essential foods, Sheikh said at a news conference, Reuters reported.

The $1.8 billion has already been allocated and the supply effort would be made in coordination with the armed forces, said Sheikh, a military major general who took charge in September of a ministry rocked by a wheat corruption scandal.

Sheikh said his ministry would seek to end procurement of wheat to open air silos by next year’s buying season and move to more sophisticated climate-controlled silos that are designed to minimize waste and prevent fraud.

The move comes as Egypt, the world’s largest wheat importer, tries to clamp down on alleged corruption in its strategic wheat supply chain that has wasted billions of pounds in public funds.

Egyptian prosecutors are investigating allegations that millions of dollars intended to subsidize local wheat farmers were used to purchase more wheat on paper than was found in silos. The public prosecutor has charged several private silo owners and others with profiteering, forgery and enabling embezzlement.

Parliamentarians who formed a fact-finding commission to investigate the suspected fraud have said upwards of two million tons, or 40% of the locally procured crop, may be unaccounted for.

Sheikh said a committee composed of officials from the supply, agriculture and finance ministries had been established to determine the proper price for local wheat to be procured next year.

However, he said Egypt had yet to decide if it will shift to a system where it pays farmers the global wheat price plus the government subsidy. The plan was mooted earlier this year as part of efforts to minimize opportunities for corruption along the supply chain but was never implemented.

Egypt was also reviewing eligibility for a smart card system through which low income Egyptians access state-subsidized food, Sheikh said. He said the ministry would cut waste by cancelling cards allocated to people who have since died or emigrated and would review eligibility criteria for everyone else. He did not elaborate on what the new criteria may involve.