19.2 C
New York
Saturday, June 3, 2023

Buy now


Inflation, IMF austerity and grandiose military plans push more Egyptians into poverty | Global Development

IAmid a worsening cost-of-living crisis, more and more Egyptians are desperately looking for second jobs, eating less meat and scrambling to find new ways to cope with soaring prices.

Ahmed Fawzi is looking for a second job, although he is currently working as a graphic designer in Cairo with little free time in the day. “It feels like the economic crisis is really squeezing me. Prices are going up every day and there’s no solution,” he said.

The Egyptian pound has lost half its value against the dollar over the past year as financial authorities in Cairo try to negotiate a tightly managed devaluation of the currency. People are also grappling with nearly 33% inflation and even higher inflation of basic goods.

Egypt’s cost of living crisis, which could see an influx of Sudanese refugees in the coming days, comes after years of state-led austerity measures that have collapsed the formerly large middle class in the most populous Arab nation.

Egypt’s poverty rate hovers near 30 percent, according to the latest government statistics, but the real figure is expected to be higher.

A man in a robe and turban talks on the street with a man shopping with his young son in front of large trays full of fruits
Abu Omar, a fruit seller, said: “I’ve had very low sales this year. People come just to see the fruit and ask prices, as if they want to buy a new car. Photography: Hamada Elrasam

Even as poverty mounts, Egypt’s government is spending heavily on megaprojects such as building a shiny new administrative capital 30 miles east of Cairo that will feature Africa’s tallest building and a lavish mosque.

“In 2019, the World Bank estimated that 60% of Egyptians lived near or below the poverty line,” said Timothy E Kaldas of the Liberate Middle East Policy Institute, an American think tank.

“There is a large portion of the population above that line, and no doubt many of them later fell below it. As inflation continued to rise, many more fell below the poverty line.”

Although Egyptian authorities have increased cash assistance to a larger population following Russia’s invasion of Ukraine, it is likely that millions of people are still in need.

Earlier this year, the IMF provided Egypt with $3bn (£2.4bn) of additional financing, including conditions requiring the country to provide cash assistance to 20m people.

“The government is not doing enough,” Caldas said. “If 60 per cent of the population was vulnerable in 2019, that means tens of millions of people are now poor or near poverty in the wake of this crisis, without any cash transfers and with woefully inadequate social protection.”

Fawzi once owned a small business selling accessories, cosmetics, children’s toys and mobile phones, but was forced to close in 2018 due to an electrical failure. Last year, he abandoned plans to reopen the business, saying: “It is very difficult to start a business now because all my money is now spent on family needs, and purchasing power in Egypt is slowing down significantly.”

The 38-year-old father-of-three is now trying to ensure he and his family can make ends meet on a monthly salary of around 5,000 Egyptian pounds (£130).

“At home, we’re trying to reduce consumption as much as possible. We’re trying to reduce electricity, water and even food use,” he said.

“We used to eat meat and chicken four times a month. Now, we only eat meat and chicken twice a month.”

Group of people scrambling to get free food from plastic bins outside an old stone building
Hundreds of people gathered outside the ancient Al-Azhar Mosque to break the 14-hour Ramadan fast with free dates and juice.Al-Azhar’s philanthropy Iftar The meals are full. Photography: Hamada Elrasam

The frantic hunt for extra work and ways to cut expenses has become the norm among the Egyptian professional class. Mahmoud Ahmed, who works at a bank in Cairo, said he found himself struggling financially.

Although his job would previously have allowed him to live comfortably among middle-class Egypt, the 30-year-old father-of-two is now struggling to support his family on a take-home salary that now equates to around £210 a month .

“I was trying to find part-time or freelance work, but an eight-hour day wasn’t enough for me,” he said. His family is trying to cut costs, such as buying half as much meat as before.

Ahmed had planned to buy a car but now describes the idea as “mission impossible”. “Car prices are crazy right now, and it’s almost impossible for someone with a job like me to buy a car,” he said.

Woman in hijab sorting piles of clothes on table
Staff at the Clothing Bank of Egypt are sorting out clothes to be distributed to the 50,000 children who need new clothes during Eid. Last year, the charity donated 2 million pieces of clothing to low-income communities. Photography: Hamada Elrasam

Egypt remains the IMF’s second-largest debtor, currently owed nearly $13.5 billion. The fund’s intervention had previously prompted Egypt to impose punitive austerity measures that have not delivered the promised prosperity.

The latest package also calls for sweeping structural reforms, including curbing Egypt’s large and opaque military economy. Military financing underpins costly government mega-projects that are a key policy of President Abdel-Fattah al-Sisi, who came to power in a military coup in 2013.

“The military and the public sector are supposed to be bound under the IMF’s program, but we’re seeing the military expand its economic activities at odds with the agreement,” Caldas said.

For now, Caldas added, the outlook for the Egyptians is certainly negative, with little sign of relief on the horizon. “Living standards in Egypt will continue to deteriorate for some time to come, inflation will persist and the currency may not have finished devaluing,” he said.

“So far, Egypt’s leadership has not accepted the need to substantially restructure its economic activity in a way that actually attracts investment,” he added. “So Egyptians will continue to fight, and more will.”

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -spot_img

Latest Articles