Inflation, IMF austerity and grandiose military plans edge more Egyptians into poverty

Increasing numbers of Egyptians are desperately hunting for second jobs, cutting back on eating meat and scrambling to find new ways to cope with soaring prices, amid a worsening cost-of-living crisis.

Ahmed Fawzi is searching for a second job even though his current role as a graphic designer in Cairo leaves him with few spare hours in the day. He said: “It feels like the economic crisis is literally squeezing me. Prices are going up every day and there’s no solution to it.”

The Egyptian pound has halved against the dollar over the past year, as the financial authorities in Cairo attempt to negotiate a heavily managed devaluation of the currency. People are also struggling to deal with inflation rates of almost 33% and even higher rates of inflation for basic goods. The cost-of-living crisis in Egypt, which is likely to see an influx of Sudanese refugees in the coming days, has followed years of state-led austerity measures, collapsing a formerly large middle class in the most populous Arab state.

Egypt’s poverty rate hovers close to 30%, according to the most recent government statistics, although the true figure is expected to be higher. Even as poverty has risen, the Egyptian state has spent heavily on megaprojects such as a sparkling new administrative capital 30 miles east of Cairo, which will boast Africa’s tallest building and a lavish mosque. “In 2019, the World Bank estimated that 60% of Egyptians lived near or below the poverty line,” said Timothy E Kaldas, of the Tahrir Institute for Middle East Policy, a US-based thinktank. “There was a very large part of the population above that line, and undoubtedly many of them have since fallen below it. As inflation continues to grow, more are falling below the poverty line.” While the Egyptian authorities increased cash assistance to a larger section of the population following Russia’s invasion of Ukraine, it is likely that there are millions still in need.

The International Monetary Fund provided Egypt with a further $3bn (£2.4bn) in financing earlier this year, including conditions demanding that the state provide cash assistance for 20 million people. “The government isn’t doing enough,” said Kaldas. “If 60% of the population in 2019 were vulnerable, that means there are now tens of millions either in or on the brink of poverty receiving no cash assistance following this crisis, which is woefully inadequate social protection.”

Fawzi used to own a small business selling accessories, makeup, children’s toys and mobile phones, but it was forced to close in 2018 after an electrical fault. Last year, he abandoned plans to reopen his business, saying: “It is very hard to open a business now because all my money is being spent now on family needs, and the purchasing power in Egypt is significantly slowing down.”

The 38-year-old father-of-three is now trying to ensure that he and his family can survive on his monthly salary of about 5,000 Egyptian pounds a month (£130). “At home, we are trying to cut consumption as much as possible. We’re trying to cut back on electricity, water and even food,” he said. “We used to eat meat and chicken four times a month. Now, we are only eating meat and chicken twice a month.”

The frantic search for extra jobs and ways to cut back has become the norm among Egypt’s professional class. Mahmoud Ahmed, who works in a Cairo bank, said he had found himself struggling financially. Despite having a job that would previously have put him comfortably in Egypt’s middle class, the 30-year-old father-of-two is now struggling to support his family after taking home a salary now equivalent to about £210 a month. “I’m trying to find part-time or freelance jobs, but working eight hours a day doesn’t really allow for that,” he said. His family is trying to cut costs, such as buying half as much meat as before. Ahmed had planned to buy a car, but now describes that idea as “mission impossible”. He said: “Car prices are going crazy now and it is almost impossible for someone working in a job like mine to buy a car.”

Egypt remains the second largest-debtor to the IMF, now owing almost $13.5bn. The fund’s intervention previously prompted Egypt to enact punishing austerity measures, yet these have not brought the prosperity that was promised. The latest package also demands sweeping structural reforms that include curbs on Egypt’s huge and opaque military economy. Military financing underpins the expensive government megaprojects that are the key policies of President Abdel-Fattah Al-Sisi, who swept to power in a military coup in 2013. “The military and the public sector are supposed to be reined in under the IMF programme, but we’re seeing the military expand its economic activities at odds with the agreement,” said Kaldas.

For now, Kaldas added, the outlook is decidedly negative for Egyptians, with little relief on the horizon. He said: “Egypt’s standard of living will continue to deteriorate in the coming period, inflation will persist, and the currency likely has not finished its devaluation. “So far, the Egyptian leadership hasn’t accepted the need to significantly restructure their economic activities in a way that would actually attract investment,” he added. “So Egyptians will continue to struggle, and more of them will.”