After a wheat and tourism crisis due to the war in Ukraine, inflation threatens the daily lives of millions of Egyptians. Their money loses its value every day.
A few days before the first anniversary of the war in Ukraine, Egypt continues to suffer economically. After a wheat crisis and that of the tourist sector, the Egyptian currency was devalued several times. Meanwhile, inflation is rising.
When war broke out in Ukraine, Egyptians initially feared a shortage of bread. Egypt is the world’s largest wheat importer and 80% of these imports come from Russia and Ukraine. But with the Istanbul agreement signed in July 2022, allowing the delivery of cereals from the Black Sea, this concern seems to have been dismissed for the moment.
At the same time, tourism, Egypt’s second source of income, has suffered from the war. The Russians, like the Ukrainians, had made the shores of the Red Sea one of their favorite vacation spots. Consequence: 30% less revenue for tourism.
90 euros per month to live
Markets devalued the Egyptian pound in March 2022, October 2022 and January 2023. In less than a year, the currency lost half its value. A devaluation that this time has nothing to do with the war in Ukraine: heavily indebted for years, Egypt had to take out a new loan from the International Monetary Fund (IMF), the third in six years. Against only three billion dollars, the central bank had to open the exchange rates which were artificially frozen.
The flight of foreign currency also complicates Egypt’s financial situation. The Prime Minister Mostafa al-Madbouli acknowledged that 20 billion dollars left the country in the first quarter of 2022, or 40% of foreign exchange reserves.
The first consequence for Egyptians is the explosion of inflation: 26% in January, 48% for food. “I don’t bring meat home anymore, laments Magda, 55, who has to support her family on 3,000 pounds a month, or 90 euros. I have six children, we are eight with my husband. Since the prices went up, I haven’t been able to bring any back. We don’t know what to eat. Everything has really increased and people are complaining.”