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At the moment, Tunisia and Sudan have the most to learn from Egypt, where modest efforts at subsidy reform have proven successful. Although each country's governmental structures and economic philosophies are dramatically different, with Tunisia adopting a more liberal and flexible exchange rate regime and Sudan continuing to rely on a confusing system of continually falling hard pegs, both are in the middle of navigating a rather tumultuous economic and political environment domestically.Tunisia, much like Egypt, has a long and complicated history of subsidizing energy and food. And like Egypt, Tunisia's subsidies had come to account for an increasing share, year after year, of its government expenditure. As with Egypt, Tunisia's nominal food subsidies have remained largely untouched.Yet unlike Egypt, in the years following the revolution Tunisia's politicians never felt they had the political capital to make difficult reforms to energy subsidies. Much like Egypt, Tunisia's appetite for additional cuts is limited.Sudan is in a substantially more difficult position than Tunisia. Significantly, in both Sudan and Tunisia – and in contrast with Egypt – austerity measures and economic reforms have increased the price of bread.
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