CAIRO: Egypt’s President Abdel Fattah al-Sisi commences his third term this week amidst significant economic hurdles, despite substantial financial injections. Sisi, re-elected in December with an overwhelming majority, is poised to begin his final six-year term, pending any further constitutional amendments.
The country faced looming economic collapse at the start of 2024, with severe currency shortages and the specter of default. However, a sudden influx of over $50 billion in loans and investments, including a $35-billion deal from the United Arab Emirates, bolstered Egypt’s economic outlook.
Former deputy prime minister Ziad Bahaa-Eldin credited the massive bailout with preventing Egypt from descending into crisis. Nevertheless, economic analysts caution that the root causes of Egypt’s economic challenges, such as excessive public spending and inflation, remain unaddressed.
While the recent financial infusion has led to some improvements in economic indicators, including credit rating upgrades, concerns persist. Inflation stands at a staggering 35 percent, posing significant challenges for ordinary Egyptians.
The financial assistance came with conditions, including transitioning to a flexible exchange rate and reducing the state and military’s involvement in the economy. However, doubts linger about the government’s commitment to economic reform, with suspicions that it may still be artificially supporting the Egyptian pound.
Egypt also grapples with regional instability, exacerbated by conflicts in neighboring Sudan and the Gaza Strip. Hundreds of thousands of refugees have sought shelter in Egypt, further straining its resources.
Despite economic hardships, public dissent has been met with severe crackdowns on civil society, resulting in mass detentions and restrictions on freedom of expression. While hopes for political dialogue and reform briefly surfaced in 2022, recent developments have dashed those expectations, leaving a sense of despair among Egyptians.
As President Sisi embarks on his final term, the path to economic recovery remains challenging, necessitating significant reforms to address systemic issues and alleviate the plight of the population. However, entrenched regional conflicts and stifled dissent pose additional obstacles to Egypt’s stability and prosperity.
