In July, the leader of Egypt, Abdel Fattah al-Sisi completes ten years in power. But the general will have little time to think about the anniversary of the coup he carried out in 2013. Given the crisis, that month seems increasingly distant and, in the middle of the year, Sisi will find an even poorer and more dissatisfied population.
The Egyptian pound has lost around 50% of its value since March last year. The annual inflation rate has already passed 20%. Prices change during the day and are scribbled and corrected by hand on the labels.
Basic products such as eggs, meat and milk have become luxury items. The middle class has accumulated two or three jobs to pay rent and car payments.
Data from 2020 indicate that 30% of the population lived below the poverty line, a figure that experts say has increased sharply with the last years of collapse.
It’s not the worst economic crisis in the Middle East. Nearby, Lebanon is going through a hecatomb, with the devaluation of its currency by 95% against the dollar and most of the population swept below the poverty line. But Lebanon has less than 6 million inhabitants. Egypt, with 110 million, is the most populous Arab country; its instability has repercussions in this region and the world.
Sisi has blamed the external environment. The Ukrainian War is one of the main factors. Russians and Ukrainians were among the main groups visiting Egypt, a country that depends on tourism. They stopped going. The conflict also prevented the importation of wheat – Egypt is the biggest buyer of the grain in the world. In the wake, foreign investors left the country, taking US$ 20 billion (R$ 100 billion).
These external factors have such an impact due to the fragility of the system. “The Egyptian economy depends on imports for the industrial and agricultural sectors,” says Amr Adly, professor of political economy at the American University in Cairo and author of “Cleft Capitalism”. The 2020 book deals with Egypt’s failure to develop its economy.
In this context, the sudden worsening of the crisis in these months is not really a surprise. “There were many signals that were ignored by the government and by the International Monetary Fund”, says Adly.
In recent years, the country has increasingly depended on dollar loans and has been exposed to the movement of capital, which is why investor flight has done so much damage.
To Adly, the Egyptian crisis, however, should not reach the extreme of the Lebanese one. He mentions the debt of the two countries, for example. Lebanon’s exceeds 150% of its GDP. Egypt’s is around 90%. Furthermore, Lebanon is in a power vacuum, with political disagreements preventing the election of a new president since the departure of Michel Aoun in October. The professor also mentions the fact that the banking system in Egypt is more solid than the Lebanese, collapsing.
To resolve the crisis, the government needs to act. With foreign help, it can reinforce the productive sectors so that they depend less on imports. “This needs to be on the radar of donors and allies,” says Adly.
Experts —including Egypt’s creditors— have suggested that the government reduce the army’s participation in the economy, allowing private initiative to develop in sectors such as construction and communications. Today, the military controls part of the productive chain in this authoritarian regime.
The absence of protests, for now, cannot be taken as an indicator of popular support for Sisi’s regime. Egypt prohibits public demonstrations, arresting and torturing opponents. But this is the same country that, in the past, revolted over the price of bread. It is also the country that, in 2011, took to the streets to demand the end of the dictatorship of Hosni Mubarak, during what became known as the Arab Spring.
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