Inflation is so high in Egypt that eggs are a luxury

Around the time Egypt’s currency hit an all-time low, an article this month about the country’s severe economic downturn quietly slipped off the front page of one of the leading newspapers. of this country.

As the editors know, the Egyptian censors could sensitive about any public hints of a crisis, especially when the government is to blame. The article was buried inside.

However, the Egyptians hardly needed to read it to know that the carpet had been ripped off their feet. Grocery prices are stratospheric. Money is worth half what it was a year ago. For many people, eggs are now a luxury, and meat is out of the question. For others, the burden of tuition and medical expenses, the middle-class life they have worked so hard to maintain is slipping out of their hands.

“Right now, we see nothing on the horizon. Nothing,” said Mai Abdulghani, 30, a communications officer at a Cairo-based development nonprofit. Her husband, a design engineer, is working four jobs to cover basic needs, and the car and kids they’ve planned won’t be an issue this year.

“All I did was think about how we would survive on a budget just to feed ourselves,” she said. “Every time we visit the supermarket, my blood boils.”

The crisis flared up last February, when Russia invaded Ukraine, rocking countries around the Middle East. In Egypt, the aftermath of the war has exposed profound flaws in the way President Abdel Fattah el-Sisi and his aides run the economy, exposing their authoritarian leadership to the heat. danger from the public as well as foreign partners.

Under pressure, the government has been forced to commit to sweeping changes that, if implemented, could ultimately generate growth, but are afflicting the Egyptian people.

When the war broke out, Russian and Ukrainian tourists, who used to make up a third of Egypt’s visitors, largely disappeared, along with most imported wheat feed its population. Foreign investors fled, taking with them about $20 billion. In a country heavily dependent on foreign goods, a combination of factors — USD is scarce, import prices are high and payments coming due on huge government debts – causing disaster.

For the fourth time in six years, Mr. el-Sisi’s government has turned to the International Monetary Fund. rescuereceived $3 billion over four years, much less bailout than before and under much stricter conditions.

Egypt has long used dollars to back its currency, the British pound, in order to maintain the Egyptian people’s ability to buy imported goods. The IMF forced it to let the value of the pound slide and fluctuate without interference.

In a request that hits the heart of Egypt’s power structure, the IMF is also asking Egypt to sell off some state-owned companies to raise money and strip them of tax breaks and other perks. military-owned companies, allowing private businesses to compete.

Mr. el-Sisi’s government came to power in 2013 through military takeovergave control of a large amount of Egypt’s resources to the army, has long operated a vast parallel economy. Those assets include military-owned cement and pasta factories, hotels and film studioand experts warn this is stifling growth.

Under Mr. el-Sisi, Egypt spent billions of dollars on flashy super project as a new capital city, highways, bridges and presidential palaces, declaring them necessary for development. Funded primarily with debt, military-owned companies have profligately riched without creating jobs, housing, or other meaningful benefits. Now, under the terms of the loan, Egypt has pledged to cut spending.

“They are really stuck. Due to the regime’s reckless behavior in the way it manages its economy, Egypt is currently extremely vulnerable,” said Timothy E. Kaldas, an analyst at the Washington-based Tahrir Middle East Policy Institute. “This IMF deal is preventing them from failing, but they are imposing a lot of conditions in a way that they have not done in the past.”

Since the latest loan deal, foreign investors have gradually returned. Dollars have flowed back to Egypt and imports are being released from ports, raising hopes inflation will fall from recent five-year levels. High of 21 percent.

But most Egyptians will continue to struggle, as they have for years as the government tightens spending on public health care, education and subsidies. Although there are 12 billion dollars of IMF loan amount In 2016, the economy struggled to create stable jobs or reduce poverty. Even before the coronavirus pandemic engulfing the Egyptian economy began in 2020, the World Bank estimated that nearly 60% of Egyptians were poor.

Many others are now falling into poverty, although Egypt has recently ramped up welfare programs and postponed cuts to bread subsidies.

At Abwab Elkheir, a charity that supports 1,500 families across Egypt, donations are falling and costs rising. Haitham el-Tabei, the foundation’s founder, said the charity had had to stop accepting new cases and rejected pleas for cash increases.

Last year, the charity began receiving more calls from middle-class families whose wages could no longer afford medical treatment or tuition.

“These are people who used to be able to live off of their wages, but suddenly became needy,” he said.

When prices started skyrocketing last March, Ms. Abdulghani, the communications officer, and her then fiance decided to get married six months early. It’s a race against inflation: They think that by rushing to get married, they can pay one rent instead of two, and furnish an apartment before the appliances become too expensive. red.

They honeymooned in sunny Upper Egypt. A week later, when they returned to Cairo, the price of the two air conditioners they wanted to buy had doubled – now they can only afford one.

Today, the price of eggs, milk and cheese in a month has quadrupled compared to a year ago; a month’s worth of beef, chicken and fish, almost three times as much. Ms. Abdulghani’s insulin shots cost seven times more.

Ms. Abdulghani, who obtained a master’s degree from a British university not long ago, is the kind of degree that guarantees the middle-class lifestyle: “Prices have gone up like an uncontrollable fever. . “This is not normal, to pay all that money just for the basics.”

As costs rose, the Egyptian pound plunged, falling from about $16 a year ago to almost $30 today. Ms. Abdulghani’s husband has been laid off from four different jobs as companies cut costs. Now he has to arrange four new jobs, returning from the office at 6pm only to work remotely until 1am.

Now, he takes public transport instead of Uber and the couple stopped eating meat for half a week. Even so, his wife estimates they spend four times more than before on food and transportation.

“Everybody at the cashier is talking to each other about the prices in an unbelievable way, about how we are going to survive like this,” she said.

Nervous about the growing outrage from the public who had ousted a previous president, during Egypt’s 2011 Arab Spring protests, the government has blamed the crisis on the war in Ukraine and the pandemic. State-controlled TV channels run clips of Europeans complaining about inflation, as if to remind Egyptians that even rich countries are suffering.

“Did we join any adventures where we squandered Egyptian money? No, the situation is difficult for all the world. This crisis is not ours,” el-Sisi said in a speech last week. “But Egypt is paying the price, like all countries in the world are paying the price.”

He also scolded anxious Egyptians on social media: “Get out!”

But even some of the normally pro-government voices have complained.

“In every Egyptian household, rich or poor, there is anxiety and fear for the future,” said Amr Adib, a popular TV presenter, on his program this month. this.

Analysts say Egypt’s promises of private-sector growth could bear fruit in the next few years, if the government doesn’t shy away from or delay them, as has so many times before. With military dominance, it is hard to give up its privileges and profits easily.

However, Egypt has run out of other lives. Mr. Kaldas said the IMF had built mechanisms to monitor and enforce the agreement that could leave Egypt with no choice but to comply. While the military factions may resist, he said, the criticism flooding into the view from generally pro-government figures suggests that some in power understand that the economy needs to change.

However, even if Egypt makes good on its commitments, the military can still maintain control of the assets by selling them to private companies headed by retired officers – a tactics they used, said Sarah Smierciak, a researcher at Harvard’s Middle East Initiative. Egypt has made no commitment to limit military control of its land and natural resources, which are far more valuable than their businesses.

“Depriving these groups of their privileges is politically impractical,” she said. “Even if all the official military companies were to be privatized — and that’s never going to happen in the foreseeable future — that would still be a relatively small economic dent in the economy. resources that the military controls.”