Egypt Watch

NYT: Inflation Is So High in Egypt That Eggs Are a Luxury

The New York Times has issued a report highlighting Egypt’s deteriorating economic and living conditions and the weak purchasing power of large segments of citizens.

“Around the time Egypt’s currency hit an all-time low, an article this month on the country’s sharp economic downturn quietly slipped off the front page of one of its flagship newspapers,” said The New York Times. “As the editors knew, Egyptian censors can be touchy about any public hint of crisis, especially when the government shares in the blame. The article was buried inside. “Yet Egyptians hardly needed to read it to learn that the rug was being yanked from under their feet. Grocery prices are stratospheric. Money is worth half of what it was a year ago. For many, eggs are now a luxury, and meat is off the table. For others, burdened with school fees and medical expenses, the middle-class lives they had worked doggedly to sustain are slipping beyond their grasp.

“The crisis stormed into view last February when Russia invaded Ukraine, shaking countries around the Middle East. In Egypt, the war’s fallout laid bare profound flaws in how President Abdel Fattah el-Sisi and his lieutenants had run the economy, exposing their authoritarian leadership to dangerous levels of heat from the public and overseas partners alike. “Under pressure, the government has been forced to commit to far-reaching changes that, if carried out, could eventually generate growth but are already tormenting Egyptians.

“When the war erupted, the Russian and Ukrainian tourists who once made up a third of Egypt’s visitors largely disappeared, along with most of the imported wheat that feeds its population. Foreign investors fled, taking about $20 billion with them. In a country that depends heavily on foreign goods, the combination of factors — scarce dollars, high import prices and payments coming due on enormous government debts — spelt disaster. “For the fourth time in six years, Mr. el-Sisi’s government turned to the International Monetary Fund for a bailout, receiving $3 billion over four years, far less relief than before and with far sterner conditions.

“Egypt had long used dollars to prop up its currency, the pound, to maintain Egyptians’ ability to buy imported goods. The I.M.F. has forced it to let the pound’s value slide and fluctuate without interference. “In a demand that strikes at the heart of Egypt’s power structure, the I.M.F. also requires Egypt to sell off some state-owned companies to raise money and strip military-owned companies of tax breaks and other privileges, allowing private businesses to compete. “Mr. al-Sisi’s government, which gained power in 2013 through an army takeover, had handed control over an enormous swath of Egypt’s resources to the military, which had long operated a sprawling parallel economy. Those assets included military-owned pasta and cement factories, hotels and movie studios, and experts warned this was suffocating growth.

“Under Mr. el-Sisi, Egypt spent billions on flashy megaprojects like a new capital city, highways, bridges and presidential palaces, declaring them essential to development. Financed mainly by debt, the spree enriched military-owned companies without producing meaningful jobs, housing or other gains. Under the loan terms, Egypt has pledged to cut spending.”