February 5, 2023

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In Egypt, dollar hunt, debt and rationing – 01/04/2023 at 22:53

A woman shows off a large US dollar banknote as she leaves a currency exchange office in a Cairo neighborhood on August 24, 2022.  (AFP / Khaled Desouki)

A woman shows off a large US dollar banknote as she leaves a currency exchange office in a Cairo neighborhood on August 24, 2022. (AFP / Khaled Desouki)

Limited bank withdrawals, rationing and advertising for the nutritional benefits of chicken feet: Dollars are in short supply in Egypt, and families cannot fill their baskets.

Officially inflation has reached 18.7%, but “the bread I bought for a pound is now being sold for three,” Rehab, 34, told AFP.

“My husband earns 6,000 pounds a month” (230 euros), “30 days ago, today we go into the red after ten”, she continues.

A man walks past chicken for sale at a shop in Cairo on March 17, 2022.  (AFP/Khaled Desouki)

A man walks past chicken for sale at a shop in Cairo on March 17, 2022. (AFP/Khaled Desouki)

Most of the goods are imported and as interest rates have risen to 8%, everything has melted away: bread fritters, balafels, bottles of oil, pulses and even baskets at subsidized prices for the 70 million Egyptians who are “poor” and therefore have a ration card.

In the supermarket, signs warn: “Maximum three bags of rice”, “Two bottles of milk” or “One bottle of oil”.

In newspapers, the National Food Council hailed “chicken feet as good for the body and the wallet.”

– meat, “no longer an option” –

A market in Adaba Square in the center of the Egyptian capital Cairo on October 24, 2022 (AFP / Khaled DESOUKI )

A market in Adaba Square in the center of the Egyptian capital Cairo on October 24, 2022 (AFP / Khaled DESOUKI )

Because meat – frozen and imported, at half the price of fresh meat – “is no longer an option: it has gone from 85 to 150 pounds per kilo,” comments Rida, 55, who also declined to give his name.

This mother-in-law struggles to feed her family of 13: “I’m a civil servant, I clean in a hospital, but there are a lot of things I can’t afford even with two salaries”, she explains to AFP.

If prices are rising, it’s because importers are struggling to free up dollars: Currently, seven billion dollars worth of goods are blocked at ports, according to officials.

And misinformation thrives: Chinese brands such as Realme and Oppo and even McDonald’s are regularly served up on social media.

Customers shop at a small public market in a town in the Sinai Peninsula on March 20, 2022.  (AFP/Khaled Desouki)

Customers shop at a small public market in a town in the Sinai Peninsula on March 20, 2022. (AFP/Khaled Desouki)

Because of the hemorrhaging at the beginning of the war in Ukraine, when investors took out billions of dollars, many banks now restrict withdrawals in dollars abroad and have tripled the cost of using a bank card. will be discovered.

Even pro-regime Amr Adib was outraged on his talk show: “At least let the Egyptians on vacation get their money back for their taxis!”.

But Cairo is taken by the throat: it has only 33.5 billion dollars in reserves against 41 in February – including 28 in the form of deposits from Gulf allies – and its external debt has tripled to 150 billion euros in 10 years. .

– “Don’t get involved” –

In March, and then in October, Cairo devalued its currency. On Wednesday, the pound lost more than 8% again. Within ten months, it would have decreased by almost 70%.

For experts, all the lights turned red when two public sector banks announced on Wednesday that they would offer certificates of deposit with 25% interest in one year.

Despite all that, according to Moody’s, Egypt is one of the five countries most at risk of defaulting on its foreign debt.

The three billion dollars in new IMF debt is underweight: debt service for 2022-2023 alone is 42 billion.

Construction site"The iconic tower"In "New capital" From Egypt east of Cairo on August 3, 2021 (AFP / Khaled DESOUKI)

The construction site of the “iconic tower” in Egypt’s “new capital” east of Cairo on August 3, 2021 (AFP / Khaled DESOUKI)

Transport Minister Kamel al-Wazir offered a solution: make tourists pay for the train in dollars.

“I need dollars to pay for imported trains. This applies to tourists and me,” Kamel al-Wazir explained recently.

But to free up more money, the government wants to privatize all the places. Public opinion therefore worries that Egypt may lose its sovereignty over its jewel, the Suez Canal.

It hammered the regime “not for sale”, but President Abdel Fattah al-Sissi, who wants to dip into his income – to create a fund that he manages himself.

“Money, I know how to handle it, don’t get involved,” he said recently.

For Stephen Rohl of the German Institute for International and Security Affairs, Egypt is in debt to “consolidate its (its) authoritarian regime”.

“The military, which Mr. Sissi relies on, is the first beneficiary: external loans protect his income and his assets and finance the mega-projects that make him big” because most of the major tasks are entrusted to the army engineers, he adds.

Far from new cities and electric trains, Rehab wanted to buy her daughter a coat for the winter.

“But at 1,000 pounds, I had to give up,” she says, her eyes misty.

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