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There is no talk above the talk of prices and their rise in Egypt at the beginning of the new year, at rates ranging between 15% and 35%, and anticipation of new increases including the rest, amid talk of an effort to reduce the value of the Egyptian pound against the dollar again.
With the first days of the new year, the citizens of the largest Arab country in terms of population (105 million) turned to each other, blaming each other and wondering at work, at home, in the street, and in the markets: Why are prices rising? And when do you stop?
To the anger, disapproval, and questions of citizens, officials responded that they were deferred decisions, that they were necessary, and that delaying them would do more harm than good. The Egyptian government distanced itself from its responsibility for these increases and attributed them to “the weakness of the pound” and external reasons.
The new prices hashtag topped social media platforms in Egypt, following a series of decisions to increase prices in means of transportation, communications, electricity, goods and commodities, as well as fees for some services.
The prices of Cairo metro train tickets jumped by up to 30%, while the prices of all internet and communications packages increased between 15% and 33%, electricity prices rose by up to 20% for the most popular segments, and the prices of car registration and ownership transfer fees doubled by up to 20%. It exceeded 200%, while the prices of building materials, consumer goods, and food increased by no less than 10%.
Citizens are confused
Mohamed Fathi (35 years old), an employee in one of the financial financing companies in Cairo Governorate, expressed his complaint about the continuous rises in prices. He told Al Jazeera Net, “The increase in prices never stops. No one can set a schedule for his expenses. What was enough for a week is now enough.” Half of it, then a third, then a quarter, and the wages do not change.”
The government confirms its priorities of increasing wages and pensions and raising the tax exemption limit, to contribute to containing as much of the consequences of the unprecedented inflationary wave as possible, as a result of the repercussions of the Corona pandemic and the subsequent geopolitical tensions.
The minimum wage for state employees is 4,000 pounds ($130) for the sixth grade, and 11,000 ($358) for the excellent grade, while the minimum wage for workers in the private sector is 3,500 pounds ($114), instead of 3,000 pounds, a 16% increase. (The dollar is equivalent to about 31 pounds in banks, and 53 pounds in the parallel market).
Safia Gamal, an administrator in one of the health departments in Giza Governorate (south of Cairo), says that these increases “were expected,” adding to Al Jazeera Net that “everyone knows that there will be price increases that will be implemented, but when and by how much no one knows, and we must adapt to them.” These increases are not the first and will not be the last, and young people must work and help their families.”
While Saeed Mahfouz, owner of a food store in a suburb of Giza, does not see that “the problem is in the increase in prices only, but in the availability of the goods in the markets, because any shortage will lead to a major price fluctuation,” and he adds in his interview with Al Jazeera Net, that no one can stop Prices, and the government says it is trying to mitigate the damage, and that it has endured a lot.
The IMF is behind the scenes
The head of the “Citizens Against High Prices” association, Mahmoud Al-Asqalani, attributed these new increases to demands International Monetary Fundwhich was planned to be announced at the beginning of the year and could have been postponed, but the Egyptian negotiator lost his strength and ability to resist such measures under great pressure.
Speaking to Al Jazeera Net, Al-Asqalani explained that he had hoped that the government would give positive signals to citizens suffering from high prices at the beginning of the new year, but what happened was the opposite, as the government’s tolerance contract was broken, indicating that the rise in the prices of basic services would raise rates. Inflation And the prices of other commodities, and citizens have no choice but to coexist, endure and be patient.
Al-Asqalani considered that it is not fair to hold the pound responsible for the high prices, the continued support, and the increase in service prices. Because of the decline in its value against the dollar, what is happening is exploitation of the crisis and speculation on the dollar that must stop until the manifestations of high prices stop.
Government sins
The head of the Development and Value Added Forum and economic expert, Ahmed Khuzaym, described the government’s decisions as “a forced step, as it does not have any sources other than collections in light of the decline in its dollar resources from tourism and remittances from Egyptians abroad, new geopolitical threats, rising global inflation rates and raising interest rates, all of which are stronger factors.” “You need solid economic ground.”
He stressed in his speech to Al Jazeera Net that such decisions were expected in light of the adoption of the draft budget last summer with a deficit of more than 824 billion pounds ($27 billion) initially, and so that the government maintains the level of the deficit and does not worsen it and reduces the pressure on the budget, whose revenues go to pay it. Debt and interest, the government will continue to increase the prices of services and goods and impose more fees.
Ahmed Khuzaym refuted such decisions that do not represent any solution to the crisis, pointing out that it is not an economic, financial, or monetary reform. The financial policy is open to loans and the monetary policy is shrinking in raising interest. There is no country whose monetary policy runs contrary to its financial policy, and the continued printing of… Money, the inability to generate dollars, and the failure to benefit from the structural sectors of industry, trade, and agriculture, are part of the government’s mistakes that have continued since 2016.
The government will not tolerate it forever
Prime Minister Mostafa Madbouly blamed the rise in prices on the rise in the official price of the dollar, and explained, during a press conference last Wednesday, that the state has shouldered more burdens to alleviate the citizen’s burden since the start of the crisis in February 2022 when the Russian-Ukrainian war broke out.
The volume of support for 5 strategic goods and services increased to 342 billion pounds, up from 100 billion pounds (such as: electricity, fuel, catering, stoves, and loaves of bread) in 2021, according to Madbouly, had it not been for the Corona pandemic, the Russian-Ukrainian war, and the global inflation crisis.
He stressed that the goal of partially increasing the prices of some basic goods and services “is to reduce the size of the financial burdens that have increased significantly on the state,” warning that if they continue, “it is possible that these problems will explode in the short term.”
Egypt has devalued the pound 3 times since February 2022, reaching 31 pounds in banks and about 53 pounds in the parallel market. The inflation rate reached about 36% and external debt maintained its record high of about 164.5 billion dollars.
