Egypt is facing challenges despite receiving praise from the International Monetary Fund (IMF) for reforms initiated since March. The $8 billion loan from the IMF presents a tough path for Egypt, with reforms impacting millions of poor Egyptians and potentially causing political and security implications.
Sky high
The IMF’s demands for a flexible exchange rate regime, implemented in March, have improved economic indicators but hurt consumers with soaring commodity prices. Egypt’s devaluations and currency fluctuations have negatively affected the poor and middle-class, pushing inflation and eroding purchasing power.
Left out in the cold
The IMF loan requires Egypt to mobilize domestic revenues and contain fiscal risks, increasing energy prices and ending fuel subsidies. Elimination of subsidies may lead to higher commodity prices and exacerbate the challenges faced by the public.
Pushback
Implementing the State Ownership Policy to level the playing field for the private sector faces resistance, particularly from the military’s involvement in civilian companies. This opposition could hinder economic progress and has already resulted in key resignations.
Backlash fears
Economic reforms, though necessary, risk public backlash due to increased pressures on Egyptian families. The dilemma of prioritizing loan-related reforms or citizen well-being poses a significant challenge for Egyptian authorities.
Saleh Salem is an Egyptian journalist
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