Brown Bag Seminar
Identification of the Poor and Nonpoor: The Application of Proxy Means Tests to Target Food Subsidies in Egypt
by Akhter U. Ahmed, IFPRI
July 14, 1999 12:30-2:00 p.m.International Food Policy Research Institute
2033 K Street, N.W., Washington, D.C., U.S.A.
Most Egyptians (about 80%) hold ration cards that guarantee a monthly quota of sugar and oil at subsidized prices. In 1997, the total fiscal costs of rationed subsidies to the Government amounted to US$258 million. The current ration-card subsidy system is very loosely targeted. Recent IFPRI research in Egypt suggests that, majority of the more wealthy Egyptians carries the highly subsidized "green" ration cards, while some of the poorest Egyptians hold the less subsidized "red" ration cards. Transferring nonpoor consumers from the green cards to the red cards, and poor consumers from the red cards to the green cards will increase equity in the system, and at the same time, will reduce subsidy costs. This reform, however, requires a system for identifying poor and nonpoor households.
At the request of the Egyptian Government, the IFPRI/Egypt research team has developed a scientific, yet administratively simple targeting method--the proxy means tests--to identify the poor and the nonpoor. The Egyptian Government has agreed to implement this method to determine eligibility for the green and the red ration cards. The proxy means tests will serve a much wider purpose than simply helping to rationalize the food ration card system, important as that is. The new method will be widely applicable to all types of targeted anti-poverty interventions in Egypt. This seminar presentation will deliberate on research results, and the efficacy of the targeting method and its implementation aspects.
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