KEY POINTS
- Egypt faces economic strain due to regional instability.
- President Sisi hints at re-evaluating $8 billion IMF deal.
- Canal revenues drop, inflation continues to rise.
Abdel Fattah al-Sisi, the president of Egypt, issued a warning that the government may need to review its $8 billion deal with the International Monetary Fund (IMF) because of growing regional and international issues.
Sisi stressed during a conference that Egypt’s involvement in the IMF program, which included cutting subsidies and floating the currency, was being put to the test under unusual conditions.
Regional turmoil and its economic toll
Egypt’s $8 billion IMF program, which was agreed in March, allowed for a freely floating currency and called for reducing subsidies on necessities like petrol and electricity.
Despite their intended economic stabilization, these policies have sparked public anger as prices for products continue to climb. Fuel prices increased by as much as 17 percent on Friday, the third increase this year. The cost of subsidized bread has also increased by 300 percent since June, severely taxing the populace.
Egypt has lost up to $7 billion in revenue in recent months, President Sisi noted, and the picture is getting worse due to ongoing regional turmoil.
Due to strikes by Yemen’s Houthi troops on Red Sea shipping, trade has shifted away from the Suez Canal, a vital source of income, leading to a sharp drop in earnings.
IMF deal under reconsideration
Sisi expressed concerns about the potential backlash from Egyptians who are struggling to cope with rising costs. He hinted at the possibility of re-evaluating the current deal with the IMF if the program’s impact becomes unbearable for the public.
“If this challenge will hurt public opinion, that people cannot bear it, we must re-evaluate our situation,” Sisi remarked.
According to Reuters, Egyptian officials are expected to engage with the IMF and World Bank at their annual meetings in Washington, where discussions on the country’s economic situation are likely to take place.
Sisi’s statements reflect the growing tension between meeting the IMF’s requirements and managing domestic pressures as inflation and public dissatisfaction mount.
Future economic decisions
The Egyptian government has further tightened economic conditions by announcing that fuel prices will climb steadily until the end of 2025.
Although the government’s measures are intended to promote long-term stability, Prime Minister Mostafa Madbouly has reaffirmed that many Egyptians are finding it difficult to pay the short-term price.
Sisi’s comments also imply that, given the current geopolitical and economic difficulties, Egypt may ask the IMF for more flexibility.
The nation is dealing with a complicated array of issues, such as declining revenue from important industries and growing costs, which may compel decision-makers to reconsider their course.
