CAIRO (AFP) – Egypt’s economy has been in crisis for years, but as the latest round of International Monetary Fund (IMF)-backed reforms bites, much of the country’s middle class has found itself struggling to afford goods once considered basics.
The world lender has long backed measures in Egypt including a liberal currency exchange market and weaning the public away from subsidies.
On the ground, that has translated into an eroding middle class with depleted purchasing power, turning into luxuries what were once considered necessities.
Nourhan Khaled, a 27-year-old private sector employee, has given up “perfumes and chocolates”.
“All my salary goes to transport and food,” she said as she perused items at a west Cairo supermarket, deciding what could stay and what needed to go.
For some, this has extended to cutting back on even the most basic goods – such as milk.
“We do not buy sweets anymore and we’ve cut down on milk,” said 28-year-old housewife Zeinab Gamal.
Most recently, Egypt hiked fuel prices by 17.5 per cent last month, marking the third increase just this year.
The measures are among the conditions for a USD8-billion IMF loan programme, expanded this year from an initial USD3 billion to address a severe economic crisis in the country.
“The lifestyle I grew up with has completely changed,” said 38-year-old mother of two Manar, who did not wish to give her full name.
She has taken on a part-time teaching job to increase her family’s income to EGP15,000 (USD304), just so she can “afford luxuries like sports activities for their children”.
Her family has even trimmed their budget for meat, reducing their consumption from four times to “only two times per week”.
Egypt, the Arab world’s most populous country, is facing one of its worst economic crises ever. Foreign debt quadrupled since 2015 to register USD160.6 billion in the first quarter of 2024. Much of the debt is the result of financing for large-scale projects, including a new capital east of Cairo.
The war in Gaza has also worsened the country’s economic situation.
Repeated attacks on Red Sea shipping have resulted in Egypt’s vital Suez Canal – a key source of foreign currency – losing over 70 per cent of its revenue this year.
Amid growing public frustration, officials have recently signalled a potential re-evaluation of the IMF programme.
“If these challenges will make us put unbearable pressure on public opinion, then the situation must be reviewed with the IMF,” President Abdel Fattah al-Sisi said last month.
Prime Minister Mostafa Madbouly also ruled out any new financial burdens on Egyptians “in the coming period”, without specifying a timeframe.
Economists, however, say the reforms are already taking a toll.
Director of the social justice unit at the Egyptian Initiative for Personal Rights Wael Gamal said they led to “a significant erosion in people’s living conditions” as prices of medicine, services and transportation soared.
He believes the IMF programme could be implemented “over a longer period and in a more gradual manner”.
Egypt has been here before. In 2016, a three-year USD12-billion loan programme brought sweeping reforms, kicking off the first of a series of currency devaluations that have decimated the Egyptian pound’s value over the years.
Egypt’s poverty rate stood at 29.7 per cent in 2020, down slightly from 32.5 per cent the previous year in 2019, according to the latest statistics by the country’s CAPMAS agency.
But Gamal said the current IMF-backed reforms have had a “more intense” effect on people.
“Two years ago, we had no trouble affording basics,” said Manar.
“Now, I think twice before buying essentials like food and clothing,” she added.
