Can Cairo stave off discontent over soaring prices? - 0 views
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As pressure builds on Egyptian livelihoods following the devaluation of the pound and the slashing of fuel subsidies in November, some analysts are wondering if another uprising is looming on the horizon for Egypt. They warn that a new wave of unrest would be bloodier than the 2011 uprising and could spell disaster for the country, still reeling from the turbulent post-revolution transition.
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Prices of basic food items, medicine, transport and housing have soared, prompting Egyptians to cut spending to make ends meet. The prices of some basic food items have shot up by up to 40%, according to CAPMAS, the Central Agency for Public Mobilization and Statistics
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protests broke out in at least four Egyptian provinces March 7. The demonstrations were triggered by bread shortages in some bakeries after Supply Minister Aly Moselhy announced a new bread subsidies system that he defended as “necessary to curb waste and corruption.” Hundreds of demonstrators blocked roads and cut railways in Alexandria, Giza, Kafr El Sheikh and Minya in protest at the minister’s abrupt decision to reduce the share of bread allotted to holders of paper ration cards to 500 loaves per bakery a day from the original 1,000 and 4,000 loaves (depending on the number of consumers in the bakery’s vicinity.)
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The decision to implement the new system was quickly reversed, however, over fears that the simmering bread crisis could provoke wider tumult. Seeking to allay citizens’ concerns that the move was a prelude to a reduction in their quotas of subsidized bread, Moselhy held a televised press conference on the day of the protests, apologizing to “all citizens who had not received bread” and asserting that their quotas would remain untouched. Promising to resolve the crisis within 48 hours, he blamed bakery owners for the crisis, hinting they were making profits off the subsidized flour they received from the government.
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In the last six years, government spending on food and fuel subsidies has represented more than a quarter of annual government expenditure (more than the country spends on education and health services combined)
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a thriving black market for the subsidized wheat, which is often resold by the bakeries at a profit rather than turned into bread
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“The patience of Egyptians is wearing thin,” Cairo University political scientist Hassan Nafaa told Al-Monitor. “Despite the economic pressures they are facing, citizens have so far restrained themselves from protesting because they are weary after two revolutions. They also fear further turmoil as they see the civil wars in some of the neighboring Arab countries. But if people are hungry and if their basic needs are not met, there is likely to be another rebellion,” he warned, adding that if that happens, “It would be messy and bloody.”
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Tensions have been simmering since the pound’s depreciation — a key requirement by the International Monetary Fund for Egypt to secure a $12 billion loan needed to finance the country’s budget deficit and shore up dwindling foreign currency reserves. Economists and analysts have lauded the flotation as “a much-needed reform that would restore investors’ confidence in the economy, helping foster growth and job creation.”
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shrinking middle class was already struggling with flat wages, high inflation and mounting unemployment
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Sisi’s approval ratings, which according to a poll conducted in mid-December 2016 by Baseera (Egyptian Center for Public Opinion Research) fell by 50% during his second year in office
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the weak currency is helping the economy by boosting exports and luring back tourists. A 25% increase in non-petroleum exports in January (compared with the same month last year), along with new loans from the IMF and other sources, is beefing up foreign currency reserves, according to The Economist. The weaker currency is also proving to be a blessing in disguise for local manufacturers as more consumers are opting to purchase local products, which are more affordable than their imported alternatives
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The real test will be the government’s ability to stave off unrest that could undermine the progress made so far. Nafaa said it is possible to quell the rising anger over soaring prices “through more equitable distribution of wealth, better communication of government policies, transparency and accountability.”
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“The government must also ease the crackdown on dissent, release detainees who have not committed terror crimes and bring more youths on board,”