According to Arab media, an economic crisis spurred by the Ukraine war is casting darkness upon Egypt’s streets and the Egyptian regime dims lights to free up energy for export and bolster hard currency reserves. Egypt the world’s biggest wheat importer relied on Russia and Ukraine for over 80 % of grain needs and struck into a grave crisis after Russia’s invasion of Ukraine in February. The Egyptian government has approached the International Monetary Fund (IMF) for a loan to support its fading economy as the Al-Sisi government is encountering serious challenges to put the aid-victim economy on track.
Egypt, a great ancient civilization and the land of a famous Nile river along with the historic Nile valleys located on both banks of the longest river of Africa. Besides cultivated green land, nature gifted the Egyptian people with tremendous resources ranging from water reservoirs to ancient civilization, Natural reserves including gas and minerals to tourism, however, the decades-long dictatoral rule, corruption of the ruling elite and government officials, and unjudicial policies of the successive governments have turned Egypt into an aid addict nation.
Interestingly, the war in Ukraine clearly exposed the import-dependent economy and tightly controlled monetary system of the country. The inflation accelerated sharply and raised to a record level of over 15 percent in recent months, which severely hurt low-income households and small businesses. Previously, Egyptian economic growth marred and remained at 3.2 percent in the fourth quarter of 2021-22 against 7.7 percent last year, whereas it was too low as compared to the already expected annual expansion of about 6.6 percent. The recent outlook report of the IMF has forecasted 4.4 percent growth in Egypt’s economy during the current year due to scarcity of foreign reserves, increased imports, rising inflation, and an overall slowdown in the economy. According to the reports, the Egyptian government has spent about 465 billion Egyptian Pounds to reduce the impacts of the Russian Special Military operation in Ukraine on the Egyptian economy but failed to avert disaster.
Currently, the Al-Sisi government is in negotiations with the IMF to secure a loan to support its deteriorating economy, refill its foreign reserves, and keep the wheel running but the global lender is already furious over the failure of the Egyptian government in fulfilling its commitments regarding the previous loan deal of $ 12 billion in 2016. The IMF demands a cut on all subsidies to the public including oil, gas, and electricity along with a reduction in the social security programs for over 20 million Egyptians. The Washington Based Lender also desires no government’s control over the Egyptian central bank, which had been under strict control of the government in the past. All such tough decisions have some political cost for the Al-Sisi regime therefore aides suggest the Al-Sisi government secure cash flows from neighboring Arab States instead of implementing drastic reforms under IMF’s agenda.
Presently, the Al- Sisi government is struggling hard to export its natural gas to energy-deficient Europe, but, this paperwork has not yet been implemented on the ground. Recently. Al-Sisi removed the Central Bank Governor to fulfill the IMF’s agenda and liberate the Egyptian pounds from Government control. Apparently, Al-Sisi has decided to follow the legacy of Sharif, hence the Egyptians should be prepared to endure the unending and unrestricted dictation of the pawnbroker in the days to come.
