Egypt's Presidential Abdel Fattah al-Sisi speaks during an interview with Reuters in Cairo. Reuters
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When Suma Badie's village in southern Egypt was chosen to pilot a program of cash handouts for the poor, no one else in her household – 33 people, sharing three rooms – thought it was worth signing up.Making the new system work is central to Egypt's plans for economic revival after years of stagnation.President Abdel-Fattah al-Sisi aims to slash a subsidy bill, mostly for food and energy, that ballooned to about 8 percent of economic output last fiscal year.Instead, money will be directed to those who need it most – eventually, about 18 million Egyptians, the poorest 20 percent of the population. Targeted handouts are a way of achieving both goals.About 15 to 20 percent of the savings are earmarked to fund the programs that are being tried out in Badie's village of Abu Teeg, near Assiut in southern Egypt.Even if all goes to plan, the government's fiscal adjustment plans are "modest," with the deficit set to narrow to 8.5 percent of output by 2019 from 10.8 percent now, according to Jason Tuvey at Capital Economics in London.Before the latter cards were introduced, Egypt used to sell subsidized bread, 20 loaves for 13 cents, to everyone, regardless of income.For such programs to work, the government needs to know who's entitled to benefit.
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