Mozambican govt reintroduces bread subsidy to avoid price hike – EUR 35 M spent in 2010 /15

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Mozambican govt reintroduces bread subsidy to avoid price hike – EUR 35 M spent in 2010 /15

10:14 CAT | 18 Jul 2016

The Mozambican government is to reintroduce the bread subsidy suspended in October 2015 in order to avoid price increases in the staple, Minister of Industry and Trade Max Tonela has announced.

“This is a more efficient alternative that will ensure the agents involved receive the appropriate compensation,” Max Tonela told the press on Thursday, explaining that the new subsidy model would “minimise the inefficiencies” that grants processes usually entailed.

Acknowledging the importance of bread in Mozambican families’ diet, Minister Tonela said that the government had to act to prevent bakeries from raising the price, at least until the first quarter of next year.

“The price of bread is a significant factor in families’ budgets, especially the less well off,” said Tonela.

The Mozambican Association of Bakers (Amopao) announced earlier this month that a rise in the price of bread was inevitable given the increased cost of raw materials and labour but the Mozambican government persuaded the industrial sector to suspend the measure while it studied alternatives.

According to the bakers’ proposal, the 250 gram loaf would go up from 7.5 meticais (0.10 euros) to nine meticais (0.12 euros) and the 200 gram from six meticais (0.08 euros) to seven meticais (0.09 euros).

In 2010, rises in the price of bread and other commodities caused a popular revolt in Maputo which degenerated into clashes with police, resulting in several deaths.

In October 2015, the government suspended bread subsidies in force since 2010, calling them “unsustainable”.

According to official data, the Mozambican government has disbursed more than 1.7 billion meticais (over EUR35 million) subsidising the bread price, between 2010 and 2015.

The price of a 250 gram loaf promptly rose from six meticais (0.12 euros) to 7.5 meticais (0.15 euros), 200 g increased from 4.5 meticais (0.09 euros) to six meticais (0.12) and 150 grams from three meticais (0.06 euros) to 4.5 meticais (0.09 euros).

Source: Lusa