For many Egyptians, buying eggs has become “a kind of luxury,” says a New York Times report, adding that “meat is off the table” for many middle-class and poor families.
Because of the depreciation of the pound by about half, school fees and medical expenses have become more difficult for wider classes of Egyptians, the report says.
The newspaper quoted employees as saying that they are “trying to survive” and provide food supplies, without any other additional expenses, even though they work in several jobs at the same time.
The crisis began last February, when Russia invaded Ukraine, and the invasion sent tremors to countries that depended on Russian and Ukrainian exports such as Egypt.
The newspaper says that the repercussions of the war revealed “profound flaws in the way President Abdel Fattah al-Sisi and his aides managed the economy, exposing their leadership to dangerous levels of criticism from their own people and partners abroad alike.”
Under pressure, the report says, the government has been forced to commit to far-reaching changes that, if implemented, could ultimately generate growth but are already tormenting Egyptians.
The outbreak of the war led to the disappearance of the Russian and Ukrainian tourists who once made up a third of Egypt’s visitors, along with most of the imported wheat that fed its population.
Foreign investors have fled, taking with them nearly $20 billion in investments, according to the New York Times.
The combination of these factors, high import prices, and huge government debt payments resulted in economic problems.-
For the fourth time in six years, the Sisi government turned to the International Monetary Fund for a bailout plan, and received $3 billion over four years, much less than previous loans, and with harsher terms.--
Egypt has long used the dollar to support its currency, the pound, to keep Egyptians able to buy imported goods. However, the International Monetary Fund forced Cairo to leave the value of the pound without interference.
In a demand that strikes at the heart of Egypt’s power structure, the International Monetary Fund is also asking Egypt to sell some state-owned companies to raise funds and strip military-owned companies of tax exemptions and other privileges, allowing private companies to compete, the paper says.
“Because of the regime’s reckless behavior in how it manages the economy, Egypt is now very vulnerable,” Timothy Caldas, an analyst at the Tahrir Institute for Middle East Policy in Washington, said. “This IMF deal keeps them from failing, but with a lot of conditions.” imposed in a way they have not done in the past.
Since the last loan deal, foreign investors have slowly returned, dollars have flowed back into Egypt, and imported goods have been released from the ports, raising hopes that inflation will ease from a five-year high of 21 percent, according to the New York Times, which says that this improvement It has yet to reach most Egyptians as the government tightens spending on public healthcare, education and subsidies.
Analysts say to the newspaper that Egypt’s promises to increase the growth of the private sector may bear fruit within a few years, if the government does not evade or stall the deal, as it has done many times before due to the dominance of the army, according to the New York Times.
However, Egypt does not have much choice but to comply with the deal, according to analysts.
Analysts told the newspaper that the International Monetary Fund had built monitoring and enforcement mechanisms into the deal that could leave Egypt no choice but to comply.
They said that although military factions may fight back, criticism from pro-government figures usually indicates that some in power understand that the economy needs to change.