It is not only fish that have made Egyptian food prices the most expensive this year. Poultry contributes a major share of these price increases, too. Egypt imported a large amount of frozen poultry from Brazil, some 50,000 tons, which will be used as a “strategic inventory” in preparation for the month of the Ramadan fast. But according to reports in the Egyptian media, the government transferred the license to import the poultry to an agent who is connected to the military – and the goods will be sold at a reduced price in army stores.
The suspicion is that this agent received an exemption from paying customs duties so it could be sold at a price of $2 per kilo, instead of $3.50 charged by private importers, who pay a 30 percent import duty. The rest of the sellers will be forced to sell the same chicken at a much higher price. The government is trying to convince people it is making an effort to increase competition to lower prices, and it has even announced – for the nth time – that it plans to privatize 32 government companies, including those owned by the military, by 2024. But at the very same time, the government is granting the army benefits and exemptions from import duties that cancel out any basis for competition.
In Egypt's ports, ships are waiting to be unloaded, but the goods cannot be released from customs because of reduced foreign currency allocations to private importers, a shortage of dollars and a dramatic reduction in the central bank’s foreign currency reserves. This shortage seriously harms the import of drugs and medical equipment for hospitals, too, and the Health Ministry’s spokesman told the Washington Post in an interview that just half of medical clinics have the proper equipment.
The health service crisis is not new, and it stems from a severe shortage of doctors too. Official figures show that more than 4,300 doctors in the public sector submitted requests last year to resign, and some 11,500 doctors quit from 2019 through 2022. After graduating, medical students are required to work in the public health sector for three to five years before they can receive certification as specialists, which will allow them to work in private hospitals. But even in these private hospitals they will not receive huge salaries: Doctors who moved to countries in Europe say that even in their first year of work there they already receive salaries that are 40 times what they would earn in Egypt.
The plummeting value of the Egyptian pound, which is now around 30 pounds to the dollar, compared to about 15 pounds last year, has dealt a harsh blow to all sectors of the economy, but for doctors it is especially hard. The salary of a doctor in the public health sector may be considered relatively high in terms of Egyptian pounds, at about 2,000 to 4,000 pounds a month, but when this is translated into dollar terms it means $150 to $200 a month, just over minimum wage.
The war in Ukraine and the coronavirus pandemic have undoubtably dealt huge blows to the Egyptian economy. The budget deficit climbed because of the need to allocate more funds to buying grain, the price of which climbed in world markets; the national debt grew accordingly; and the drop in the dollar was the final seal. Egypt was forced to borrow $3 billion from the International Monetary Fund, rely on some $13 billion deposited in Egyptian banks by Saudi Arabia and the United Arab Emirates last year, and issue government bonds at attractive interest rates to pay for regular government functions.
The forecast for economic growth is bleak, and now stands at approximately 4.5 percent – compared to 5.6 percent back in September – and the pound has still not hit bottom, with the banks predicting an exchange rate of 35 pounds to the dollar by the end of this month. Egypt listened in fear to the statements of Saudi finance minister Mohammed al-Jadaan, who said at the World Economic Forum in Davos in January that from now on, Saudi Arabia would stop providing unconditional aid and in the future would work with international institutions, such as the IMF, to make such assistance conditional on the recipient countries revamping their economies.
The Egyptian government has not ruled out such conditions, and it is likely that it would want to implement them in full – if only a third of its population was not living in poverty, while another 20 percent was teetering around the poverty line. Implementing all the demands of the International Monetary Fund would mean another deep cut in subsidies for basic consumer goods and increasing poverty – in the hope that the economic reforms would have positive results within four or five years.
Egypt needs a quick and massive influx of dollars, and is trying to enlist investors – who are in no hurry to come, and not just because of the monetary uncertainty. Anyone who was willing to buy government companies, such as Saudi Arabia, for example, which had shown interest in buying a major share of one Egypt’s most important banks, has run into convoluted bureaucracy, or an almost impassable obstacle in the form of the military, which controls a huge share of the civilian economy through the civilian companies it owns – and the preference it receives in carrying out projects. This is also the reason that Egypt has not succeeded so far in privatizing most of the companies it had wanted to put on offer in the free market.
Al-Sisi can justifiably claim that he and his government are not to blame for the global crisis that has rocked the Egyptian economy, but when he directs huge sums to extravagant projects such as the new administrative capital, whose cost is estimated at $85 billion, or electrification of the trains and expanding the subway at a cost of billions of dollars – it is no wonder that investors and financial institutions are skeptical and worried that Egypt will be unable to meet its debt payments, which are just about to reach 95 percent of its gross domestic product.