CAIRO (`) – A group of women stand in front of a vegetable vendor at a street market in one of Cairo’s oldest neighborhoods, screaming in frustration.
“Every day there are new prices,” said one. “When will this war end?” screamed another, cradling a baby in her arms.
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Russia’s invasion of Ukraine, now in its second year, has pushed up world food and energy prices and added another layer to Egypt’s economic crisis. Soaring inflation, a severely weakened currency and other problems followed decades of government mismanagement and widespread disruption, beginning with the turmoil of the 2011 Arab Spring popular uprising, then years of militant attacks, followed by the coronavirus pandemic and the war in Ukraine .
The crisis has pushed many Egyptians out of the middle class, while the country’s poor – about a third of the population – are without basic necessities. Many wonder how long they can survive like this.
Hany Hassan is struggling to feed his four school-age children. He buys less and less of his salary as a bartender in a coffee house.
“The past year has been the hardest of my life,” said Hassan, 43, who earns about $110 a month by working 12-hour shifts, seven days a week. “I’m afraid that one day I won’t be able to feed the children anymore.”
Annual inflation hit 26.5 percent in January, the highest in five years, with food prices in urban areas soaring 48 percent, officials said.
Many staple foods such as rice, cooking oil, bread and, more recently, eggs have doubled in price in Cairo’s supermarkets. Prices for 1 kilogram of chicken or other meat have almost doubled in a year, standing at 300 Egyptian pounds (about $10) for meat and almost 90 Egyptian pounds (about $3) for chicken.
The rise has made these proteins an unaffordable luxury for all but the wealthiest.
The war in Ukraine, which rocked the world economy, hit Egypt where it is financially vulnerable. The most populous Arab country and the world’s largest importer of wheat has to buy much of its food from other countries to help feed its population of more than 104 million.
“It is therefore important to view Egypt’s inflation problem in the context of its broader external position issues,” said Callee Davis, economist at Oxford Economics Africa.
Egypt’s import bill initially rose due to higher global prices for commodities like fuel and wheat bought in dollars, and this led to foreign exchange shortages, Davis said. This forced the central bank of Egypt to adopt policies to conserve the country’s foreign exchange reserves, including import restrictions, which pushed inflation even further, Davis said.
The war has also slowed Egypt’s economic growth. In February, the European Bank for Reconstruction and Development revised its forecast for Egypt’s growth this year to 4.3 percent, down from a previous forecast of 5 percent.
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For many, trouble began in 2016, when President Abdel Fattah el-Sissi’s government launched a reform program aimed at reversing long-standing distortions in Egypt’s economy in exchange for loans from the International Monetary Fund. The program introduced new taxes and included significant cuts in government subsidies for basic goods – policies dating back decades.
Western governments and international financial institutions welcomed the austerity measures. However, they made life difficult for ordinary Egyptians. El-Sissi blames the recent surge in inflation on the war in Ukraine.
“Circumstances are tough for the whole world. This crisis is not ours,” he said in a recent speech.
To help poor and middle-class families cope with the impact of the measures, the government has ramped up welfare programs, raised civil servants’ salaries and postponed cuts in subsidized bread and planned electricity rate hikes.
It has also set up hundreds of state-owned markets across the country selling basic necessities at cheaper prices.
Then last year the government turned to the IMF for a new bailout loan, its fourth in six years. The hope is that the $3 billion deal will help generate another $14 billion from Egypt’s international and regional partners, including wealthy Gulf monarchies.
But the Arab Gulf states seem increasingly reluctant to help Egypt, as they have done over the past decade.
“We need reforms. We burden our people. We expect others to do the same, to make their efforts. We want to help, but we want you to do your part, too,” Saudi Finance Minister Mohammed Al-Said Jadaan said at the World Economic Forum annual meeting in Davos, Switzerland in January.
Egypt has pledged to maintain IMF-led reforms, including a free-floating exchange rate and reducing the military’s powerful hold on the economy — a significant concession.
The government passed a privatization initiative in December and said it would withdraw from industries not seen as strategic by 2024. The policy aims to increase the private sector’s contribution to the economy from 30 percent in 2021 to 65 percent by 2025.
Executives have been criticized for their handling of the economy and costly infrastructure projects, including a new $45 billion capital building, other developments and freeways. Many have complained on social media, with some calling for the government to resign.
One of the country’s richest people, billionaire businessman Naguib Sawiris, recently told a Lebanese newspaper that Egypt needs a political and economic overhaul.
The government has repeatedly defended such mega-projects as essential to improving living conditions and creating jobs for the growing population.
HA Hellyer, a geopolitical expert at the London-based Royal United Service Institute for Defense Studies, said the pressure on Egypt’s economy is overwhelming for any government.
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“Some good steps have been taken, the question is whether or not these will be enough to reverse the economic crisis, and if not, what other options are the authorities willing to consider?” he said.
Meanwhile, the Egyptians are becoming increasingly discouraged.
Samira Abdel-Wahab, an accountant who works for the state-owned electric company, wandered from stall to stall in the Megharbleen street market in Cairo’s Darb el-Ahmar district, looking for the cheapest prices.
“I’m afraid the damage is beyond repair,” said the 37-year-old mother of three.
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