Egypt’s Unfortunate Anniversary

by Jesse Moore

Abdel Fattah al-Sisi Source: CNN

The tenth anniversary of the coup that brought Egypt’s president, Abdel Fattah al-Sisi, to power is approaching. Unfortunately for Egyptians, it won’t be an occasion for celebration. In the most populous Arab country, 60 million people live below or slightly above the poverty line. Russia’s invasion of Ukraine has inflated the price of wheat, of which Egypt is the world’s biggest importer. On top of this, the Egyptian pound lost 50% of its value last year, and inflation runs above 20%.

The country has turned to the IMF for the fourth time in six years, making Egypt the fund’s second biggest debtor. In order to secure its latest loan of $3 billion over four years, Cairo had to commit to reforms targeting the role of Egypt’s military in the country’s economy. The military (which Sisi served as commander-in-chief before becoming president) controls many sectors, from cement-making to pasta factories. These sectors are remarkably uncompetitive, as the army pays no taxes, customs fees, and receives preferential treatment from the government.

The concessions include the state entirely and partially exiting over 120 sectors within three years. However, it is doubtful that Cairo will seriously enact these reforms. Egypt underwent similar reforms to secure an IMF loan in 2016, after which the government kept expanding the army’s economic footprint. There are no serious provisions for enforcement in the agreement, and Egypt has been bailed out by its neighbors in the past, as total economic implosion would be disastrous to the region. The government will likely continue mismanaging the economy, lining its military supporters’ pockets instead of undergoing serious change.