Egypt’s President Abdel Fattah al-Sisi starts his third term this week supported by huge new funding, but experts say the path out of economic trouble will still be long and difficult.
Sisi won December’s presidential election with 89.6 percent of the vote, competing against three unknown candidates.
He is scheduled to start his third term officially on Wednesday, with local media reporting that he will swear the oath before parliament the day before.
This six-year term is set to be the 69-year-old’s last, unless another constitutional amendment again extends his tenure.
Pundits have speculated about a potential cabinet reshuffle as Cairo struggles to contain the fallout from two years of punishing economic crisis and dire foreign currency shortages.
As 2024 began, the Arab world’s most populous country seemed to be hurtling towards default and economic collapse, analysts said, before it suddenly received more than $50 billion in loans and investments.
Within weeks, the United Arab Emirates announced a $35-billion land development deal for Egypt’s Ras al-Hikma, the International Monetary Fund more than doubled a $3-billion loan, and the World Bank and European Union signed fresh financing agreements.
The massive bailout has saved Egypt “from falling into the abyss”, according to former deputy prime minister Ziad Bahaa-Eldin.
Following the deals and a fresh currency devaluation — the country’s fifth since 2016 — economic indicators seemed to be improving.
Financial services companies raised Egypt’s credit ratings, as months-worth of blocked inventory began to be released into the import-dependent economy.
– Bailout has strings attached –
But “we shouldn’t believe the crisis has passed, or that our problems have been solved”, Bahaa-Eldin wrote in a recent op-ed in privately owned newspaper Al-Masry Al-Youm.
The roots of Egypt’s crisis — including “the pace of public spending, the state’s hold on the economy, and the inflation rate” — must be addressed, economic analyst and former parliamentarian Mohamed Fouad told AFP.
This week, Egyptians will watch Sisi swear the oath from the New Administrative Capital — a controversial $58-billion project in the desert east of Cairo — while many people struggle to make ends meet with inflation currently 35 percent.
The bailout, more generous than widely expected, has come with strings attached for Cairo — namely moving to a flexible exchange rate and “withdrawing the state and military from economic activity”, according to IMF chief Kristalina Georgieva.
But analysts have warned that the government might still be propping up the Egyptian pound. And according to Fouad, “the state wants to intervene more, not withdraw” from the economy.
Concern has mounted that, without major reform — which the government has vowed to undertake — Egypt could find itself in a new cycle of crisis.
“To avoid falling into the same jam, we need a qualitative shift in how we manage our real economy,” according to Bahaa-Eldin.
At the same time, Egypt finds itself facing regional fallout from two wars on its borders.
More than 500,000 refugees have come into Egypt from Sudan, escaping the war between the regular army and the paramilitary.
In the Gaza Strip, 1.5 million Palestinians seek shelter in the city of Rafah, surrounded by the Egyptian border and ongoing Israeli bombardment.
– Restriction on public opposition –
Two-thirds of the 106 million population within the country struggle to sustain their lives, having been in or under the poverty line even before the current crisis.
According to Mohamed Lotfy, executive director of the Egyptian Commission for Rights and Freedoms (ECRF), people were already frustrated because they believed there was no solution.
However, with the heavily praised significant increase in money, “they may hold onto hope, they’ll anticipate improvements,” he told AFP.
“If it doesn’t, people will feel like they’ve given up and waited and obeyed the rules, but have nothing to display for it — they still can’t afford to survive.”
Despite some Egyptians expressing their frustration and disappointment on social media, the opportunity for public opposition has nearly disappeared.
In the past ten years, Cairo has carried out what Lotfy refers to as a “war of attrition” against civil society — detaining tens of thousands of individuals, prosecuting rights organizations, and eliminating nearly all opposition.
Although there seemed to be a breakthrough on the horizon in 2022 — when Sisi initiated a “national dialogue” and started releasing high-profile political prisoners — “all those hopes were soon shattered,” Lotfy mentioned.
Now, with more than twice as many people newly detained as released, according to an ECRF count, Lotfy states Egypt’s rights record “continues to be terrible” as “a feeling of hopelessness” takes hold of the country.
AFP
