In Egypt, eggs have become a luxury and moneylenders are thriving

CAIRO – Around the time Egypt’s currency hit an all-time low, an article about the country’s sharp economic downturn slipped quietly from the front page of one of its major newspapers this month.

As the editors knew, Egyptian censors can be sensitive to anyone public indication of crisis, especially when the government shares the blame.

The object was buried inside.

However, the Egyptians didn’t need to read it to realize that the carpet was being torn out from under their feet.

Crisis

Food prices are stratospheric.

The money is worth half of what it was a year ago.

For many, eggs are now a luxury and meat is no longer on the table.

For others, saddled with tuition and medical bills, the middle class life what they had worked so hard for gets out of hand.

“Right now, we don’t see anything on the horizon. Nothing,” says Mai Abdulghani, 30, a communications officer at a nonprofit in Cairo.

Her husband, a design engineer, yes four jobs to meet their needs, and the car and kids they had planned are not a possibility this year.

“All I do is think about how we’re going to survive on our budget just to feed ourselves,” she says.

“Every time we visit the supermarket, my blood boils.”

The crisis emerged in February when Russia invaded Ukraine, rocking Middle Eastern countries.

In Egypt, the aftermath of the war has exposed deep shortcomings in the president’s actions Abdel-Fattah el-Sissi and his lieutenants had run the economy, exposing his authoritarian leadership to dangerous levels of criticism from both the public and his foreign partners.

Under pressure, the government was forced to compromise with changes far-reaching ones which, if implemented, could generate growth, but which haunt the Egyptians.

When war broke out, the Russian and Ukrainian tourists they formerly made up a third of Egypt’s visitors have largely disappeared, along with most of the imported grain that feeds its population.

Foreign investors fled, taking an estimated $20 billion with them.

In a country heavily dependent on foreign products, the combination of factors – dollar shortages, high import prices and large payments on public debt due – spelled disaster.

For the fourth time in six years, the El-Sissi government has asked the International Monetary Fund for a bailout, which has granted it 3 billion dollars in four years, much less than before and with much more severe conditions.

Egypt has long used dollars to back up its currency, the pound, and thus maintain the ability of Egyptians to purchase imported goods.

The IMF forced him to leave the value of the pound slip and float without interference.

In a request that strikes at the heart of Egypt’s power structure, the IMF is also asking Egypt to sell some state-owned companies to raise funds and deprive military-owned companies of tax breaks and other privileges, allowing private companies to compete.

El-Sissi’s government, which came to power in 2013 following a takeover by the military, had handed over control of a huge chunk of Egypt’s resources to the military, which had long run a booming shadow economy .

Those assets included military-owned pulp and cement factories, hotels and movie studios, and experts warned it was stifling growth.

Under el-Sissi, Egypt has spent billions on flashy megaprojects such as a new capital, highways, bridges and presidential palacesdeclaring them essential for development.

Funded mainly with debtthe spree enriched military-owned businesses without producing jobs, housing, or other significant benefits.

Now, under the terms of the loan, Egypt has agreed cut spending.

“They are really stuck. Due to the regime’s reckless behavior in managing the economy, Egypt is now extremely vulnerable,” said Timothy E. Kaldas, an analyst at the Washington-based Tahrir Institute for Middle East Policy.

“This deal with the IMF keeps them from going bankrupt, but it’s putting a lot of conditions on them in a way they never have in the past.”

Since the last loan deal, foreign investors have slowly returned.

Dollars have returned to Egypt and imported goods are leaving the ports, suggesting that inflation will come down from 21%, its highest level in five years.

But most Egyptians will continue to struggle, as they have for years as the government cuts spending on public health, education and subsidies.

Despite a $12 billion IMF loan in 2016, the economy has had difficulties create stable jobs or reduce poverty.

Even before the coronavirus pandemic began, which devastated Egypt’s economy in 2020, the World Bank estimated that nearly 60% of Egyptians were poor.

Many more are now falling into poverty, although Egypt has recently strengthened welfare programs and postponed the cuts to subsidized bread.

At Abwab Elkheir, a charity that helps 1,500 families across Egypt, donations are declining and costs are rising.

Its founder, Haitham el-Tabei, has had to stop accepting new cases and reject requests to increase cash donations.

Last year, the organization began receiving more calls from middle-class families whose salaries no longer covered medical care or tuition.

“These are people who were able to live on their wages, but suddenly felt in need,” she explained.

When prices began to skyrocket in March, Abdulghani, the communications officer, and her then-fiancé agreed to get married six months early.

It was a race against inflation:

If they married quickly, they reasoned, they could pay one rent instead of two and furnish an apartment before appliances became too expensive.

They honeymooned in sunny Upper Egypt.

A week later, in Cairo, the price of the two air conditioners they wanted to buy had doubled:

now they could only afford one.

Today, the eggs, milk and cheese for one month they cost four times as much as a year ago;

beef, chicken and fish nearly triple.

Abdulghani’s insulin injections are expensive seven more times.

“Prices were going up like an uncontrollable fever,” says Abdulghani, whose master’s degree from a British university was, not so long ago, the kind of degree that would grant him a middle-class lifestyle.

“This is not normal, paying all that money just for the basics.”

As costs have risen, the Egyptian pound has plummeted, falling from around 16 to the dollar a year ago to nearly 30 now.

Abdulghani’s husband has been fired from four different jobs as companies cut costs.

Now he’s juggling four new jobs, coming home from the office at 6pm only to work remotely until 1am.

He now commutes by public transit instead of Uber, and the couple stopped eating meat for half the week.

Even so, his wife reckons they spend four times more than before in food and transportation.

“Everyone at the checkout talks to each other in disbelief about the prices, how we’re going to survive this way,” he says.

Worry

Unnerved by growing resentment from a public that had already ousted a president once, in the 2011 Egyptian Arab Spring protests, the government blamed the crisis on the war in Ukraine and the pandemic.

State-controlled television channels broadcast segments that show Europeans complaining about inflation, as if to remind Egyptians that rich countries are also suffering.

“Did we get into any adventure where we squandered Egypt’s funds?

No, circumstances are difficult for everyone. This crisis is not ours,” el-Sissi said in a speech last week.

“But Egypt is paying the pricehow all the countries of the world are paying”.

He also chastised concerned Egyptians on social media:

“Enough already!”

But some normally pro-government voices have also raised grievances.

“In every Egyptian house, rich or poor, there is a state of worry and fear about the future,” Amr Adib, a prominent TV presenter, said on his show this month.

Analysts say Egypt’s promises to boost private sector growth could bear fruit within a few years if the government doesn’t sidestep or block them, as it has done many times in the past.

Given the dominance of the military, they are unlikely to give up their privileges and benefits easily.

However, Egypt has run out of other life preservers.

Kaldas said the IMF included monitoring and enforcement mechanisms in the deal that could leave Egypt no choice but to comply.

Even if military factions are resisting, he said, criticisms from normally pro-government figures suggest some in power understand that the economy needs a change.

However, even if Egypt delivers on its commitments, the military could retain control of the assets by selling them to private companies run by retired officers, said Sarah Smierciak, a researcher at Harvard’s Middle East Initiative.

The military already exercises control over some ostensibly private companies run by those friends.

Egypt has also not pledged to curb military control of land and natural resources, of which there are many more precious compared to their companies.

“Depriving these groups of their privileges is not realistic, politically speaking,” he said.

“Even if all official military enterprises were to be privatized – and this is something that will never happen in the foreseeable future – it would still be a relatively small dent in the economic resources that the military controls.”

c.2023 The New York Times Society