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Egypt warns bakers against strike action

MYT 11:55:02 PM

CAIRO (Reuters) - Egyptian bakers will face legal action if they carry out a threat to strike, Minister of Supply and Internal Trade Bassem Ouda said, raising the stakes in a dispute linked to state bread subsidies.

The prospect of a bakers' strike has compounded a sense of economic crisis in a country where a drop in foreign currency reserves has already caused fuel shortages and raised the potential for more social unrest.

Ouda told Egypt state TV that a Supreme Constitutional Court ruling gave the ministry the power to close indefinitely bakeries that halt production and refer their owners to the criminal court.

"If it happens that they undertake this type of irresponsible step and halt production in 100 or 1,000 bakeries, we are ready with an emergency plan," Ouda said on Monday.

The state has long helped fund bread production, with the cheapest loaves selling for 5 piastres, or less than 1 U.S. cent

Bakers say the government owes them 400 million Egyptian pounds ($59 million) in incentives they are due for producing state-subsidised bread for the poor. Neither the government spokesman nor officials at the supplies ministry were available to comment on the bakers' claims.

The government, which is seeking a $4.8 billion loan from the International Monetary Fund, is under pressure to curb spending on food and fuel subsidies that swallow up around a quarter of the state budget.

A bakers' association representing 25,000 privately run bakeries had threatened to strike last month, but postponed the move until mid-March to give the government time to meet their demands.

Bakers' representatives are due to meet Ouda on Tuesday, said Abdullah Ghorab, the association's head. About 260 bakeries briefly went on strike last week but were persuaded to return to work pending more talks, he said.

Ghorab's association includes 19,000 bakeries that produce 5-piastre loaves.

Egypt's economy has been in tatters since the revolt of 2011 that ousted Hosni Mubarak. A mostly desert nation with a population of 84 million, it is the world's biggest importer of wheat.

(Reporting by Ahmed Tolba and Tom Perry; Writing by Tom Perry; Editing by Erica Billingham)

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