With the announcement that Egyptian President Abdel Fattah Al-Sisi has won a third presidential term which ends in 2030, Egyptians are facing the question of what challenges lie ahead over the next six years which will add to the many existing crises.
The power cuts, which resumed after the three-day election, are perhaps an indication of what Egyptians face over the coming years.
Egyptian opponents say that to avoid the eruption of suppressed anger, the country is in urgent need of a political breakthrough. This includes releasing detainees in political cases, ending pretrial detention, lifting the ban on newspapers and websites, reducing the influence of the military establishment in political and economic life, and strengthening the independence of the judicial and legislative branches.
Since Al-Sisi took power in Egypt in mid-2014, after the overthrow of the late President Mohamed Morsi in a military coup in 2013, Egyptians have been facing difficult living conditions and unprecedented unjust repression.
Al-Sisi begins his third term in office burdened with heavy debts that are hard to pay back. Nearly $42.3 billion are expected to be paid back in 2024, including $4.89 billion to the International Monetary Fund (IMF), according to official data.
Egypt’s external debt rose from $41.7 billion at the beginning of Al-Sisi’s first presidential term in 2014, to $96.6 billion at the beginning of his second term in 2018, reaching $165 billion at the beginning of the third term, bringing the country’s external debt to its highest level in the history of the country.
Egypt must pay back about $32.8 billion of medium- and long-term debt, and about $9.5 billion of short-term debt and interest instalments, over the next year. Meanwhile, pressure is expected to continue on the Egyptian financial portfolio to pay due debt instalments and interest worth $19.4 billion during 2025 and $22.8 billion during 2026, according to the Central Bank of Egypt.
Egypt’s total foreign debt exceeds $165 billion because of government excessive borrowing and requesting loans from international and Gulf institutions which placed the country among the five countries most at risk of defaulting on their foreign debts, according to Moody’s.
With Al-Sisi’s inevitable move to borrow again and attempt to increase the value of the loan provided by the IMF to $10 billion, and to obtain loans from the Arab Monetary Fund, the Chinese Development Bank and the African Development Bank, and to extend the terms of Gulf deposits, the external debt bill will approach $180 billion.
Egyptian researcher Mohamed Anan says that this large debt will naturally be reflected in the population’s standard of living, as most of the country’s budget revenues will be directed primarily to paying debt instalments and interest, which means that Egyptians will not see any positive results in the upcoming period.
In light of this exorbitant debt bill, it is expected that the pace of the programme to sell 35 state-owned companies will be accelerated, and new companies may be added to the list in the coming months, while making way for the army’s exit from economic activities, a requirement of the IMF and Gulf states’ approval of additional support for Egypt.
Potential floating of local currency
Egyptians are anticipating a new and painful floating of the local currency during the first quarter of 2024, which may rise to a new record level, reaching between 40 to 45 pounds to the dollar, according to recent forecasts issued by international banks and institutions.
This would unleash the dollar exchange rate in the black market, which could reach 50 or perhaps 60 pounds. Due to the scarcity of foreign currency in the country, it was forced to devalue the pound three times in the period from March 2022 to January 2023.
Expectations that the Egyptian pound will lose its value again, and its purchase power will collapse, will further accelerate a new wave of high prices in various sectors, which will further damage the poor and middle classes.
It appears that the Egyptian government has begun preparing for this. It is imposing additional fees on telegram and telephone messages, postal letters, entry fees for cinemas and amusement parks and first and second-class train tickets, for a period of one month, starting this month, in accordance with Resolution No. 280 of 2023, published in the official governmental newspaper.
Media reports also suggest that the government plans to increase domestic electricity tariffs starting from January by 30 per cent, and to raise the price of fuel, adding to the burden of Egyptians who already suffer from low wages and high rates of poverty, inflation and unemployment.
With the slowdown in tourism and the decline in Suez Canal revenues due to the war in Gaza, in addition to the decrease in remittances from Egyptians abroad in 2022-2023 by 30.8 per cent, from $31.9 to $22.1 billion, according to government data, it seems that Egypt is heading towards a harsh austerity programme and exceptional measures, and Egyptians are the victims.
Economist and former head of the Egyptian Journalists Syndicate, Mamdouh El-Wali, is pessimistic about the improvement of economic conditions over the next two years. This is because the instalments and interest on medium- and long-term external debt reached $52 billion, and those on short-term external debt are $29 billion. Terms of the short-term debts have usually been renewed by the Egyptian administration, but it must pay the interest on them, which are around $1 billion a year.
El-Wali believes that Egypt is about to face more external and internal debt, and higher inflation rates, in light of continued borrowing by ministries, banks and private companies, and the rise in the volume of imports. In addition, projects that are not linked to social priorities continue, including the New Administrative Capital east of Cairo, New Alamein northwest of the country and the monorail, which depleted the country’s stock of foreign currency and exacerbated the dollar deficit in the banking system to $27.2 billion as of October.
In addition to the complex economic situation, Egyptians are facing a political impasse, with the tightening of the security grip, the growing influence of the military establishment, the continued arrest of thousands of opponents, the ban on hundreds of newspapers and websites, and the persecution of human rights defenders, journalists and civil society activists.
Observers are concerned about Al-Sisi’s approach which opposes any peaceful political activities and continues to persecute his opponents. He has imprisoned the liberal oppositionist, Hisham Kassem, and referred former parliamentarian, Ahmed Al-Tantawi, to trial after he failed to collect the necessary powers of attorney to run for presidency.
These concerns are reinforced by several factors including the fact that the National Dialogue of more than a year and a half has ended with no tangible results, activists are being arrested on charges of demonstrating for Gaza, and the presidential elections were carried out through the forced mobilisation of state employees and acquiring votes in exchange for food commodities and financial bribes, according to human rights organisations.
In his interview with Middle East Monitor, Anan confirms that the violations witnessed in the electoral process and the questionable results are increasing levels of frustration, the lack of a political horizon, the dominance of one voice and resistance towards any action that would stir the stagnant waters on the Egyptian arena. However, the fragile economic situation may force the authorities to show some flexibility on the political level, as a form of relief, which remains a weak possibility, given how things have been going over the past ten years.
In the face of this political stalemate and the increasing critical economic situation, the alternative, according to Anan, will be to turn the focus on external challenges, as the atmosphere is heating up across the Egyptian borders, whether with Gaza, Libya, or Sudan. These are the challenges that may pull the rug from under internal challenges and it’s a strategy the current regime is good at, and its media outlets know how to highlight in a way that turns a blind eye to internal failures. Perhaps later, there will be a call for a new constitutional amendment that allows Al-Sisi to run for a fourth term under the pretext of confronting regional challenges that require stability and not exposing the nation to any tremors that would put it in the crosshairs.
The Egyptian president succeeded in passing a constitutional amendment in April 2019 extending the presidential term from four to six years, and allowing him to run for a third term.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.