Egyptians are called to the polls from Monday to give a new mandate to President al-Sisi. Voters are mainly expecting the improvement of their purchasing power rolled up by the last years of economic slowdown.
The priority of the vast majority of Egyptians is always and again the improvement of purchasing power. This wish emanates first from the cohort of the underprivileged, 40% of the population lives below the poverty line. And it is also a new acute demand from the middle class. Especially the 7 million civil servants who constitute one of the pillars of the electorate of President al-Sisi. Due to the economic slowdown that followed the movement of Tahrir Square, the better-off Egyptians saw their economies melt and their incomes depreciate. They first gave up their holidays. Seven years later they are still struggling and have to cut back on all the expenses of daily life, including depriving themselves of meat testifies a teacher.
The main macroeconomic indicators of Egypt are nevertheless positive.
The government is expecting strong growth this year, in the order of 5%. Foreign investment is ebbing, foreign exchange reserves have recovered and inflation, which peaked at 35% last summer, is starting to deflate. These are the first fruits of the fiscal consolidation plan applied for IMF assistance. VAT has been introduced, commodity subsidies abolished and the Central Bank has shed the pound. The 10 billion euro granted by the IMF in November 2016 served to consolidate the public accounts. And until it gets better in Egypt, as in all IMF-assisted countries, it’s worse for the population that endures adjustment.
What are the plans of President al-Sisi to bring back prosperity?
Pharaonic real estate projects. They will be realized with the faithful and solid financial support among others of Saudi Arabia. China is also ready to inject $20 billion into the new administrative capital that has to emerge from the east of Cairo. The fabulous Mediterranean deposit of Zohr which should allow Egypt to become again a gas exporter will also rebalance the external balance and the public accounts. But these big projects as well as the oil industry will not generate many sustainable jobs. And that’s what Egypt needs most. Today it is still agriculture that provides the most jobs.
40% of young Egyptians are unemployed!
Those who helped to overthrow Hosni Mubarak in 2011 to demand more social justice have the same demands in 2018 even if they no longer express them in the public square. And they are more numerous to suffer from this lack of perspective, because of demographic vitality. The Egyptian population increases each year by two million to 300,000 citizens. Experts believe that a sustained growth of about 5% for five years will cope with this human surge in the labour market but this will not be enough to unlock a low-productivity economy, still very protected and often controlled by the army.