ABSTRACT
This chapter focuses on Egypt's system of food and energy subsidies. It describes the pressures for policy changes by the United States and other aid donors and discusses their only limited leverage over Egypt's policy makers. The chapter suggests some ways in which the US and other aid donors have in fact helped to perpetuate the system of subsidies and the role foreign aid might play in easing the transition to a domestic price structure closer to world prices. The subsidies for food cover to some degree all the items considered basic to the Egyptian diet, including bread, beans, lentils, refined sugar, rice, tea, cooking oil, red meats, chicken, and fish. Funds for the subsidies on food and energy can only come from transfers from other sectors of the economy, in earned foreign exchange, or through external assistance.
