Egyptian President Abdel Fattah Al-Sisi has wasted vast sums of money at a time when Egyptians are starving, according to an analysis by Israel's Haaretz newspaper. The newspaper pointed out: "Egypt needs a quick and massive influx of dollars, and is trying to enlist investors – who are in no hurry to come, and not just because of the monetary uncertainty."
The Haaretz analysis stated: "Sisi can justifiably claim that he and his government are not to blame for the global crisis that has rocked the Egyptian economy, but when he directs huge sums to extravagant projects such as the new administrative capital, whose cost is estimated at $85 billion, or electrification of the trains and expanding the subway at a cost of billions of dollars – it is no wonder that investors and financial institutions are sceptical and worried that Egypt will be unable to meet its debt payments, which are just about to reach 95 per cent of its gross domestic product."
It noted that the dish koshary, a mixture of rice, pasta, fried onions, garlic and lentils, has always been the food of poor, hardworking labourers and students, but koshary has recently become a luxury as its price has tripled.
After Al-Sisi had called on the Egyptian people to boycott foods that had become too expensive, he justified the difficult situation by saying that his government was not responsible for the economic crisis. Instead, he indicated that it was a "global crisis," referring to the war in Ukraine, adding: "The Egyptian people have the awareness to bear these conditions."
The extortionate price of fish has also come into question, as the price of a kilo of mullet has reached 110 pounds (about $3.50), while the Ministry of Agriculture says that the country's fish production covers 85 per cent of domestic consumption.
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Egypt is the largest fishing country in Africa, but it also imports fish from Russia, which has raised the price of this staple food.
It is not only fish that has risen in cost; there has even been a poultry crisis after the increase in the prices of imported feed. To solve the crisis, Egypt imported a large amount of frozen poultry from Brazil before Ramadan.
However, according to reports in the Egyptian media, the government transferred the license to import the poultry to an agent connected to the military and the goods will be sold at a reduced price in army stores. This means that they do not pay any customs fees on it, while importers from the private sector pay about 30 per cent in fees, making it an unfair competition.
In Egypt's ports, ships are waiting to be unloaded, but the goods cannot be released from customs because of reduced foreign currency allocations to private importers, a shortage of dollars and a dramatic reduction in the central bank's foreign currency reserves. This shortage seriously harms the import of drugs and medical equipment for hospitals too.
The Health Ministry's spokesperson told The Washington Post in an interview that just half of medical clinics have the proper equipment: "The health service crisis is not new, and it stems from a severe shortage of doctors too. Official figures show that more than 4,300 doctors in the public sector submitted requests last year to resign, and some 11,500 doctors quit from 2019 through 2022."
According to the newspaper, doctors' salaries in the public health sector range between 2,000 to 4,000 Egyptian pounds a month, but when translated into dollar terms, it equates to $150 to $200 a month, which is just over the minimum wage.
Many doctors immigrated from Egypt, as wages in private hospitals also became low after one dollar became valued at over 30 Egyptian pounds – 15 Egyptian pounds a year ago.
International banks expect the Egyptian pound's exchange rate will reach 35 against the dollar by the end of this month.
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The Haaretz analysis mentioned: "The war in Ukraine and the coronavirus pandemic have undoubtedly dealt huge blows to the Egyptian economy. The budget deficit climbed because of the need to allocate more funds to buying grain, the price of which climbed in world markets; the national debt grew accordingly, and the drop in the dollar was the final seal. Egypt was forced to borrow $3 billion from the International Monetary Fund, rely on some $13 billion deposited in Egyptian banks by Saudi Arabia and the United Arab Emirates last year, and issue government bonds at attractive interest rates to pay for regular government functions."
Last January, Saudi Finance Minister Mohammad Al-Jadaan indicated that the Kingdom is changing its approach in the way it provides aid to its allies and is encouraging countries in the region to carry out economic reforms.
Al-Jadaan added, in remarks on the sidelines of the World Economic Forum in Davos conference: "We used to give direct grants and deposits without 'strings attached', and we're changing that as we're working with multilateral institutions to actually say we want to see reforms."
Although only a third of its population does not live in poverty, the Egyptian government may still implement the demands of the International Monetary Fund, which: "Would mean another deep cut in subsidies for basic consumer goods and increasing poverty – in the hope that the economic reforms would have positive results within four or five years."
The analysis states: "Egypt needs a quick and massive influx of dollars, and is trying to enlist investors – who are in no hurry to come, and not just because of the monetary uncertainty. Anyone who was willing to buy government companies, such as Saudi Arabia, for example, which had shown interest in buying a major share of one of Egypt's most important banks, has run into convoluted bureaucracy, or an almost impassable obstacle in the form of the military, which controls a huge share of the civilian economy through the civilian companies it owns – and the preference it receives in carrying out projects. This is also the reason that Egypt has not succeeded so far in privatising most of the companies it had wanted to put on offer in the free market."
For the 9th time, Egypt announced that it plans to privatise 32 state companies, including those owned by the military, by 2024.
However, at the same time, the government gives the military advantages and exemptions from import duties that eliminate any basis for competition.
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