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If I understand the situation with Egypt's Current Account had a deficit of about $8bn in 2012. And this spring the government rationing:

Bakers become latest victims of Egypt subsidy cuts | World news | guardian.co.uk

For decades, the state has subsidised the cost of food and fuel - essential in a country where around one in four live below the poverty line. But a severe economic crisis has forced the Islamist-led government to not only cut subsidies but also to introduce rationing. On Tuesday, ministers announced plans to introduce a smart-card system that limits each citizen to three small loaves a day.

Of course, that was due to the demands of IMF:

Bakers become latest victims of Egypt subsidy cuts | World news | guardian.co.uk

The government has little choice but to implement its financial reforms. Egypt's foreign reserves have more than halved since 2011. The IMF is refusing to make good on a much-needed and much-delayed loan worth $4.8bn until Egypt reduces its subsidies - which make up around a quarter of its annual budget.

"Frankly, they're stuck," said Bassiouny of the government. "They don't have much room."

So as I see it, unless the international economic situation turns around (which is unlikely), this level of support package is needed annually only to keep the situation from deteriorating. And that is if the donors has the good sense to demand that Egypt does not follow IMF's advice, instead of the opposite. But the food and fuel situation as it is, is not a good situation for any stable government. I don't know what level of subsidies would be needed for an Egyptian government that can do something significant about the food situation (through subsidiesed food or redistribution to the poor). Anyone wants to take a stab at guesstimating that?

The 306306 "Support Egypt" campaign is interesting as it is basically volountary redistribution (if the incoming government chooses to use it so). It points towards a redistributive solution being possible with support from the business community. Essentially Bismarckian welfare (pay the poor before they revolt). However, I don't know of any government succeeding in such a solution during an economic downturn, the two exampels that comes to mind - Bismarck and Putin - introduced theirs after the immediate crisis had passed.

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by A swedish kind of death on Thu Jul 11th, 2013 at 04:50:38 AM EST
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