Egypt expanding efforts to ease food subsidy costs -minister

Egypt is expanding its use of modern technology to tackle decades-old problems of corruption and waste in its costly food subsidies system as the government pursues reforms to ease the strain on state finances.

Supplies Minister Khaled Hanafi said some 25 million Egyptian families who already have electronic smart cards for bread purchases will be able to use them to buy 20 different subsidised goods at grocery stores across the country from July.

The new system aims to raise incentives for Egyptians to buy only as much subsidised bread as they need, helping reduce spending on wheat, of which Egypt is the world's top importer.

Subsidies of bread and energy products have traditionally eaten up around a quarter of Egypt's budget, which is forecast to end the current fiscal year on June 30 in deficit to the tune of 12 percent of economic output.

Officials say wheat consumption is kept artificially high in part by citizens who purchase subsidised loaves for the equivalent of one U.S. cent and feed them to their livestock because the bread is cheaper than animal feed.

"A motivation was needed (to bring down consumption), so we came up with a system to give citizens points for the bread that they do not use," Hanafi told a meeting of local businessmen in Cairo on Tuesday night.