Currency Devaluation Makes the problem even worse in Egypt !
Some 50 million Egyptians are living in Poverty according to world bank estimate and Structural reforms are essential to make the foreign Money Flowing
The Egyptian pound has been Struggling against the US dollar for months, leading prices of essential commodities to hike, especially wheat, rice, sugar, and cooking oil, which has taken a toll on low and average-income households.
One US dollar is worth about 30.95 Egyptian pounds, while the parallel market declined by 70 Egyptian Pounds per US Dollar.
The International Monetary Fund (IMF) is likely to raise the amount stipulated by a loan agreement signed with Egypt further to support the North African country's ailing economy by this week
"The loan could reach up to US$10 billion to help the Egyptian economy survive amid local and external factors, including the Israeli war on the neighbouring Gaza Strip and tensions in the Red Sea negatively influencing the revenues generated by the Suez Canal," an official Egyptian source told The New Arab.
How Egypt went Broke Under Sisi ?
Steven cook in Foreign Policy Writes,
“Throughout much of the summer of 2013, Egypt was in the grips of what could be described as “Sisi-mania.” Songs, sandwiches, music videos, poems, and even pajamas paid tribute to Abdel Fattah al-Sisi, the military officer who’d just overthrown President Mohamed Morsi.
From the outside, it was a bizarre spectacle as millions of Egyptians rejoiced at the military’s ruthless and brutal intervention against the Muslim Brotherhood apparatchik who’d only become president a year before, in June 2012. Even so-called revolutionaries and longtime critics of Egypt’s authoritarian political system seemed to genuinely adore the diminutive military leader who promised them a fresh start after a tumultuous 18 months beginning with the uprising against longtime leader Hosni Mubarak in late January 2011.
With Morsi jailed and members of the Muslim Brotherhood dead, arrested, or on the run, Sisi promised Egyptians better days, though he warned his fellow citizens to be patient. That was wise. Egypt’s complex economic, social, and political problems had only deepened as Egypt lurched from one crisis to another throughout the fraught and short-lived democratic transition. Yet a decade later, Sisi has not rewarded Egyptians for their patience. Quite the opposite: The man who was supposed to have rescued Egypt is now overseeing its ruin.”
Sisi promised Egyptians prosperity, but Egypt is flat broke. The statistics are staggering. Inflation is running at almost 35.9% .The country’s international debt is almost $164.7 billion and its overall debt is projected to reach nearly 97 percent of the country’s GDP in 2024,. Government officials have been forced to manage Egypt’s finances like a shell game, moving money around in a vain attempt to hide the country’s precarious economic conditions. The Cost of Servicing the debt is staggering $42 billion.
The US dollar is in shortage in the country and Foreign Companies are struggling to get hard currency while the Affluent Egyptians are reckoning with Emigrating to neighbouring countries . (The exchange rate was about 7 pounds to the dollar when Sisi came to power.)
Sisi has been making the case that the country’s economic tribulations are the result of issues beyond his control, especially the COVID-19 pandemic and Russia’s invasion of Ukraine. Those crises have no doubt created significant economic challenges that countries—the United States included—have had difficulty managing. Yet Sisi’s protestations are clearly a discursive strategy to downplay his own culpability in the process of ruining the Egyptian Economy .
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The Mega Projects Just Outside Cairo which has been Six years in the making at an estimated cost of $59 billion, it is the grandest in a slew of megaprojects being built by a president determined to reshape Egypt.
The president is “borrowing money from abroad to build a massive city for the rich,” said Maged Mandour, an Egyptian political analyst. But poor and middle-class Egyptians are paying the price tag for the megaprojects through taxes, lower investment in social services and subsidy cuts, even if the economic rationale for the developments is questionable, he added.
Egypt’s finances, overall, were fragile even before Russia invaded Ukraine in February. Mr. el-Sisi had borrowed heavily to fund the megaprojects, as well as billions of dollars in international arms purchases, helping to quadruple the national debt over a decade.
Egypt is making too little to cover its debts.
Foreign investors have mostly stayed away from Egypt, deterred by the military’s tight grip on the economy. That, combined with a lack of focus on developing domestic industries, has meant the private sector, outside oil and gas, has contracted every month for nearly two years.
During the Last Agreement with the IMF in late 2022, the International Monetary Fund (IMF) and Egypt reached an agreement on a fourth loan package via the Extended Fund Facility (EFF). It granted the Egyptian government a loan of USD 3 billion. The initially requested amount of USD 12 billion was drastically reduced as both parties could not agree on several conditions,such as the IMF’s call for the government and the army to reduce their footprint in the economy. Yet there have been few buyers, because these assets are either not worth anything, no one knows how to assign them a value, or potential buyers are sitting on the sidelines waiting for another devaluation of the Egyptian pound (which would be its fourth since March 2022) so they can get whatever quality firms there are at even cheaper prices. The Devaluation of Egyptian Pound would be Intriguing to Exporters only when the Local Conditions are allowed these business to Prosper and earn the Required Hard Currency
Dire Circumstances for Common Egyptians :
Thinking about the Reality and Harsh Conditions at home, many struggling Egyptians have been leaving illegally via Boats to Greece and Mediterranean .Some dead along along the way in boat Wreck that had some 350 to 350 Egyptians Aboard
As Steven Cook Wrote
Recently, an astute Egypt analyst tweeted, “I can honestly say I no longer see a way out from this.” By “this,” I suspect she meant the ruin that Sisi has made of Egypt. A decade or so after Egyptians rose up demanding bread, freedom, and social justice, they have none of those things.\
Egypt is not the Only COUNTRY that has been suffering with these kind of crisis. Almost every Authoritarian Regime and its cronies swindle money via various means at the expense of common People. The Russian Oligarchs , the CCP and its cronies in China make money via the route that Egypt does with its Military . But other Nations have something with them Like Oil or Good Manufacturing Prowess to earn hard currency that Egypt lacked .
Egypt Need Democracy to Move forward :
Egypt’s poverty rate is continuing its previous upward trend dating back to pre-2011 Revolution times. According to official figures, 30 percent of Egyptians live below the poverty line; but the World Bank estimates that 60 percent should actually be considered poor or vulnerable. With a population of over 108 million, these figures translate into anywhere between 30 and 60 million impoverished people, a mass that the authoritarian regime should fear.
Over the years, and not necessarily during Sisi’s rule alone, the military institution became a large and significant economic actor in the country. In fact, Egypt’s military today is an independent economic player that practically controls the state’s public sector and is the essence of state capitalism that the Free Officers Revolution of 1952 established. Yezid Sayigh writes that the military is involved in or controls “real estate development, creation of industrial and transport hubs, natural resource extraction, relations with the private sector, and capitalizing the public sector with private investment.” All the military institutions’ economic activity is secret, and no outside monitoring authority is allowed to examine their records. Indeed, an important consideration in the IMF’s two loans since 2016 continues to be the public disclosure of the military’s business and lessening its role in the economy so that the private sector can enjoy unbridled operational freedom. But this economic role is accompanied by the widespread employment of thousands of former military officers, not only in the institution-controlled companies but in the public sector on the national and local levels. Thus, in addition to a secret and independent economy, the military exerts political influence over the whole polity, which limits the ability of the private sector or, indeed, regional and international funders to force changes on Egypt’s macroeconomic picture.
The regime of Abdel Fattah el-Sisi cannot continue the current trajectory of borrowing money to address budget deficits or fund social and development programs and ill-advised grandiose projects. Nor should the regime rely on a false premise that “Egypt is too big to fail” and assume that lenders will always be ready to supply the massive amounts of loans that Egypt needs. To be sure, as socioeconomic conditions worsen and the macroeconomic situation becomes more dire, the Egyptian regime has only two choices: increased repression that would continue decades of autocratic rule, or a gradual but committed democratic transition that can restore the promise of the 2011 Revolution.
The IMF delegation before sending Money to Egypt must understand this , “Military supervised and controlled development has led to a mushrooming national debt that is slowly eating away at essential funds for development. Politically, Egypt under the military has become a republic of fear in which free opinion is criminalized, thousands of political prisoners are held indefinitely, and the promise of a bright future is dashed. In other words, if authoritarianism has been at the heart of Egypt’s problem, why would it now be considered a panacea to get the country out of its protracted crises?
Imad K.Harb of the Arab center noted last year,
“Sisi and his regional allies and supporters, specifically Saudi Arabia and the UAE, must realize that applying cosmetic solutions such as aid and grants without essential economic and political reforms will only prolong the rapid collapse of the Egyptian polity. The international community, especially the United States, must also pull its proverbial head out of the sand and see that only change in Egypt will save the country and keep it as a stable and peaceful partner in a turbulent region.
In November 2023, IMF's Managing Director Kristalina Georgieva said that the fund had been "seriously considering" boosting its loans to Egypt as the economic impact of Israel's war on Gaza took hold.
But the IMF must Strictly Favour Economic Changes Perceived by the Ruling Elite to Open the opportunities for everyone and make it conditional to make military get out in Industries that’s been Non Productive . Then Only this Devaluation will have any value and save the Egyptian people from Abysmal Catastrophe .