Egypt has just obtained at the last minute an extension of almost 5 billion euros to avoid bankruptcy, but this is at the cost of a historic increase in interest rates decided by the Egyptian central bank and a devaluation of 38% of the currency.
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The emergency measures to avoid the country’s bankruptcy immediately hit the Egyptian population hard. While two thirds already live below the poverty line, Egyptians are asphyxiated, even more than yesterday, and all this on the eve of Ramadan festivities. Concretely, this means that it is impossible today for a family to eat properly, even while earning two minimum salaries, approximately 10,000 pounds per month, the equivalent of 180 euros.
The country’s finances are temporarily saved but the risks of revolt persist. The Egyptian economic crisis is deep and structural. The country has been in debt for years and inflation has not fallen below 35%. The authorities know that they can no longer count on the three historical sources of income for the country – the Suez Canal, tourism and money sent by the diaspora – because two of these pillars have collapsed in recent years. The Covid crisis and the war in Ukraine have devastated the tourism sector. Before the war, 40% of foreigners who visited Egypt were Ukrainian or Russian. For the Suez Canal, since the start of the year, state revenues have fallen by 50% due to Houthi attacks in the Red Sea.
A disillusionment for the president and his pharaonic dreams
This is a very bad start for President al Sissi’s 3rd term and above all a huge disillusionment. Abdel Fattah’s dreams to develop the country were limitless. His dreams now collide with reality, notably that of the construction of “Sissi City”, this new administrative capital in the desert, east of Cairo. This was until then al Sissi’s priority objective, whatever the cost to the country: “If the price of the country’s progress and prosperity is to deprive us of water or food like others, then we will be thirsty and we will be hungry”, he said on September 30, in front of an assembly of Egyptian political leaders and businessmen. He then defended his project for a new capital, the cost of which, estimated at 53 billion euros, continues to be reassessed upwards.
In a country on the verge of bankruptcy, such a pharaonic project seems astonishing. But precisely, the president could thus protect himself from the consequences of a possible bankruptcy of the country. This is the analysis delivered by political scientist Maged Mandour to the journalist from Wall Street Journal : “By settling in the desert, it allows him to create a distance between himself and the center of Cairoexplains the political scientist. So in the event of a revolt somewhere, he would be able to repress it without it affecting the central power, without it blocking it.” President Al Sissi is therefore engaged in a time trial today to finish his fortress in the desert, before the outbreak of a social revolt which seems inevitable.