Cairo, Aug 29 (Reuters) – Economists and investment banks say Egypt’s economic reforms have been a huge success. Zeinab doesn’t think so.
“Everything is expensive,” said the elderly woman as she walked through a market in the center of Cairo. “I mean, the basics – expensive electricity, expensive gas, expensive water, expensive life. What should people do? Should people steal in order to live? “
On paper, the data seem to show that the reforms initiated in 2016 with the International Monetary Fund (IMF) are taking hold.
Inflation hit its lowest level in four years last month, despite a round of fuel price hikes. Unemployment fell from 9.9% in the same period of 2018 to 7.5% in the second quarter of 2019, and the non-oil private sector expanded slightly in July.
Bankers’ research has hailed Egypt as one of the hottest emerging market stories, with debt investments rising. The central bank expressed confidence that inflation is under control and cut rates last week, and analysts expect further cuts.
But ordinary Egyptians complain that after years of price hikes, currency devaluation and austerity measures in return for an IMF loan of $ 12 billion, they see no improvement in daily life.
There were no signs of protests in a country that human rights activists say is in the midst of a raid on freedoms. But the Egyptians, who have had patience for a better life for the past five years, are becoming increasingly frustrated.
“You don’t feel with anyone. Honestly, they don’t sympathize with anyone, ”she said. “If the President knew of these things – there are many poor people, Mr. President, people that only our Lord knows about. So do us a favor and send someone. “
The IMF measures were intended to bring Egypt’s budget and balance of payments deficits under control following the unrest following the 2011 uprising that ousted Hosni Mubarak.
“The history of reform in Egypt is, in our opinion, the best in (Eastern Europe, the Middle East and Africa) and perhaps in emerging markets as a whole,” said UK-based Renaissance Capital in a report in June. “We remain very optimistic about Egypt.”
But for Ahmed, a 61-year-old tapestry craftsman, the last five years have been miserable.
“Honestly? We say ‘Where are you, Hosni (Mubarak) and where are your days?’ Hosni’s days are irreplaceable – we knew what he was worth when he left, ”he said, asking, like others who spoke to Reuters about the economy, to only use his first name.
“WE ALL PAY”
The proportion of Egyptians living below the poverty line rose in the 2017/18 financial year from 27.8% in 2015/16 to 32.5%, the state statistics agency announced in July. It sets the national poverty line at 8,827 Egyptian pounds ($ 534) per year.
According to IHS Markit’s Purchasing Managers’ Index (PMI), non-oil private sector employment has declined in 53 of the past 60 months.
According to Reuters calculations based on Treasury Department data, public sector wages rose an average of 3.4% year-on-year in the second quarter of 2018 – not nearly enough to match the inflation rate, which peaked at 33% in 2017 .
Mohsen Kamal, a middle-aged bread baker, said young people struggle to find work and are underpaid when they find work, especially if they want to earn enough to raise families.
“How much will [a young man] to earn? Three thousand pounds? Okay, the rental of an apartment is £ 1,200 or £ 1,700 … what water does he pay for and what electricity and gas? And what mode of transport will he use? Today the cheapest bus ticket costs five pounds, ”he said.
The lifting of fuel subsidies, a key part of the IMF deal, was particularly painful as higher transportation costs translate into higher prices for almost all goods.
“Who pays the price? Tell me, ”Essam, a middle-aged fruit seller, said of the fuel price increases. “We all pay.”
To curb the effects of austerity and inflation, the government has put in place targeted safety net programs.
Angus Blair, head of the Cairo-based think tank Signet, said the government should invest in smaller infrastructure projects across the country rather than focusing on mega-projects. It should also work with the private sector to help it grow faster, he said.
“The economy is growing fast, but it has not yet resulted in significant job creation,” he said. “But the overall picture has improved from a macroeconomic point of view.”
President Abdel Fattah al-Sisi has repeatedly praised the patience of the Egyptians with austerity measures and promised that the reforms would eventually improve the standard of living.
Sisi took office in 2014 after leading the military overthrow of Egypt’s first democratically elected President, Mohamed Morsi of the Muslim Brotherhood, in 2013 after mass protests against his rule.
“All that is asked is one thing: wait and you will see. Wait and you will see miraculous miracles in Egypt, ”Sisi said last year.
Mohsen complained that the waiting time was too long.
“I haven’t seen any improvement so far,” he said. “We are patient, but where will the patience end?”
$ 1 = 16,5200 Egyptian pounds reporting from Yousef Saba; Additional coverage by Sayed Sheasha, Hayam Adel, and Ahmed Tolba; Editing by Ulf Laessing