Eggs Are a Luxury in Egypt, Food Shortages following Ukraine War

· Situation to Ease after IMF Loan

After months of punishing inflation and a plummeting currency, Egyptians are growing louder about the crisis. In exchange for a bailout, the I.M.F. is imposing stern conditions on the government.

Around the time Egypt’s currency hit an all-time low, an article this month on the country’s sharp economic downturn quietly slipped off the front page of one of its flagship newspapers.

As the editors knew, Egyptian censors can be touchy about any public hint of crisis, especially when the government shares in the blame. The article was buried inside.

Yet Egyptians hardly needed to read it to learn that the rug was being yanked from under their feet. Grocery prices are stratospheric. Money is worth half of what it was a year ago. For many, eggs are now a luxury, and meat is off the table. For others, burdened with school fees and medical expenses, the middle-class lives they had worked doggedly to sustain are slipping beyond their grasp.

“Right now, we see nothing on the horizon. Nothing,” said Mai Abdulghani, 30, a Cairo-based communications officer at a development non-profit. Her husband, a design engineer, is working four jobs to cover the necessities, and the car and children they had planned on are out of the question this year.

“All I do is think about how we’ll survive on our budget just to feed ourselves,” she said. “Every time we visit the supermarket, my blood boils.”

The crisis stormed into view last February, when Russia invaded Ukraine, shaking countries around the Middle East. In Egypt, the war’s fallout laid bare profound flaws in the way President Abdel Fattah el-Sisi and his lieutenants had run the economy, exposing their authoritarian leadership to dangerous levels of heat from the public and overseas partners alike.

Under pressure, the government has been forced to commit to far-reaching changes that, if carried out, could eventually generate growth, but are already tormenting Egyptians.

When the war erupted, the Russian and Ukrainian tourists who once made up a third of Egypt’s visitors largely disappeared, along with most of the imported wheat that feeds its population. Foreign investors fled, taking about $20 billion with them. In a country that depends heavily on foreign goods, the combination of factors — scarce dollars, high import prices and payments coming due on enormous government debts — spelled disaster.

For the fourth time in six years, Mr. el-Sisi’s government turned to the International Monetary Fund for a bailout, receiving $3 billion over four years, far less relief than before and with far sterner conditions.

Egypt had long used dollars to prop up its currency, the pound, to maintain Egyptians’ ability to buy imported goods. The I.M.F. has forced it to let the pound’s value slide and fluctuate without interference.

In a demand that strikes at the heart of Egypt’s power structure, the I.M.F. is also requiring Egypt to sell off some state-owned companies to raise money and to strip military-owned companies of tax breaks and other privileges, allowing private businesses to compete.

Mr. el-Sisi’s government, which gained power in 2013 through an army takeover, had handed control over an enormous swath of Egypt’s resources to the military, which had long operated a sprawling parallel economy. Those assets included military-owned pasta and cement factories, hotels and movie studios, and experts warned this was suffocating growth.

Under Mr. el-Sisi, Egypt spent billions on flashy megaprojects like a new capital city, highways, bridges and presidential palaces, declaring them essential to development. Financed mainly by debt, the spree enriched military-owned companies without producing meaningful jobs, housing or other gains. Now, under the terms of the loan, Egypt has pledged to cut spending.

“They’re really stuck. Because of the regime’s reckless conduct in how it’s managed the economy, Egypt is now extremely vulnerable,” said Timothy E. Kaldas, an analyst at the Washington-based Tahrir Institute for Middle East Policy. “This I.M.F. deal is preventing them from failing, but they’re imposing a lot of conditions on that in a way they hadn’t in the past.”

Since the latest loan deal, foreign investors have slowly returned. Dollars have flowed back into Egypt, and imported goods are being released from ports, raising hopes inflation will ease from a recent five-year high of 21 percent.

But most Egyptians will continue to struggle, as they have for years as the government tightened spending on public health care, education and subsidies. Despite a $12 billion I.M.F. loan in 2016, the economy struggled to generate stable jobs or reduce poverty. Even before the coronavirus pandemic, which walloped Egypt’s economy, began in 2020, the World Bank estimated nearly 60 percent of Egyptians were poor.

Many more are now descending into poverty, though Egypt has lately bolstered welfare programs and postponed cuts to subsidized bread.

At Abwab Elkheir, a charity that supports 1,500 families across Egypt, donations are falling and costs are rising. The charity has had to stop accepting new cases and refuse pleas to increase cash handouts, said its founder, Haitham el-Tabei.

Last year, the charity began getting more calls from middle-class families whose salaries no longer cover medical treatments or school fees.

“These are people who used to be able to live on their salaries, but suddenly became needy,” he said.

When prices began shooting up last March, Ms. Abdulghani, the communications officer, and her then-fiancé decided to get married six months early. It was a race against inflation: By rushing to wed, they thought, they could pay one rent instead of two, and furnish an apartment before appliances got too expensive.

They honeymooned in sunny Upper Egypt. A week later, back in Cairo, the cost of the two air-conditioners they had wanted to buy had doubled — they could now afford only one.

These days, a month’s worth of eggs, milk and cheese costs quadruple what it did a year ago; a month’s worth of beef, chicken and fish, nearly triple. Ms. Abdulghani’s insulin shots cost seven times more.

“Prices were rising like an uncontrollable fever,” said Ms. Abdulghani, whose master’s degree from a British university was, not long ago, the kind of qualification that would have all but guaranteed a middle-class lifestyle. “This is not normal, to pay all that money just for the basics.”

As costs rose, Egypt’s pound plunged, falling from about 16 to the dollar a year ago to almost 30 now. Ms. Abdulghani’s husband has been laid off from four different jobs as companies cut costs. Now he juggles four new jobs, returning from the office at 6 p.m. only to work remotely until 1 a.m.

He now commutes on public transit instead of by Uber, and the couple stopped eating meat half the week. Even so, his wife estimates they spend four times what they used to on food and transportation.

“Everyone at the cashier is talking to each other about the prices in disbelief, about how we’ll survive like this,” she said.

Jittery about growing resentment from a public that deposed a president once before, in Egypt’s 2011 Arab Spring protests, the government has blamed the crisis on the war in Ukraine and the pandemic. State-controlled TV channels run segments that show Europeans complaining about inflation, as if to remind Egyptians that even rich countries are suffering.

“Did we get into any adventures where we squandered Egypt’s funds? No, circumstances are tough for all the world. This crisis is not ours,” Mr. el-Sisi said in a speech last week. “But Egypt is paying the price, like all the world’s countries are paying the price.”

He also scolded Egyptians worrying on social media: “Cut it out!”

But even some normally pro-government voices have risen in complaint.

“In every Egyptian household, rich or poor, there is a state of concern and fear for the future,” Amr Adib, a prominent television host, said on his show this month.

Analysts say Egypt’s promises to increase private sector growth could bear fruit in some years, if the government does not dodge or stall on them, as it has many times before. Given the military’s dominance, it is unlikely to surrender its privileges and profits easily.

Yet Egypt has run out of other lifelines. Mr. Kaldas said the I.M.F. had built monitoring and enforcement mechanisms into the deal that could leave Egypt little choice but to comply. Though military factions may resist, he said, the criticism spilling into view from normally pro-government figures suggests that some in power understand the economy needs changing.

Even if Egypt makes good on its commitments, however, the military could preserve control of assets by selling them off to private companies headed by retired officers, said Sarah Smierciak, a research fellow at Harvard’s Middle East Initiative. The military already exercises control over some ostensibly private companies led by such cronies.

Egypt also made no pledges to curb military control of land and natural resources, which are far more valuable than its businesses.

“Stripping the privileges of these groups isn’t realistic, politically speaking,” she said. “Even if all the military’s official companies were privatized — and that is something that will never happen in the foreseeable future — that will still be a relatively minor dent in the economic resources the military controls.”