CAIRO: Egyptian President Abdel Fattah al-Sisi has revived economic growth and tackled pressing problems in power and gas supply, but as he heads for a second term, he must juggle austerity under an IMF programme with the need to tame inflation.
Sisi inherited an economy in tatters when he took over the presidency in 2014, requiring aggressive reforms that have largely stopped the rot while hurting most Egyptians through a currency devaluation and withdrawal of some price subsidies.
“He’s now at the crossroads that every Egyptian president has found himself in,” said Reham Eldesoki, an independent economist long focused on Egypt. “He needs to push forward on intensive reforms, to move forward in building services and non-oil industry and to make Egypt really investment-friendly.”
Sisi’s performance in consolidating the gains over the next four years – he is set to cruise to victory in a presidential election which began on Monday – will be watched well beyond Egypt’s borders.
European nations particularly worry that any faltering of reforms could worsen unemployment and encourage young Egyptians to cross the Mediterranean illegally, aggravating already sizeable flows of migrants from north Africa.
Sisi, who led the military’s overthrow of Egypt’s first democratically-elected president in 2013, was elected president the following year after a prolonged period of popular protests had scared away many investors and foreign tourists.
Successive governments’ reluctance to devalue the overpriced currency had led to an acute foreign exchange shortage, dampening imports and pricing Egyptian exports out of foreign markets.
Sisi’s signature economic achievement so far has been concluding a three-year deal with the International Monetary Fund in 2016. Under this, the government has raised the price of subsidised fuel to ease the huge burden on the budget, increased value-added tax to 14pc and devalued the Egyptian pound against the dollar by more than half.
Published in Dawn, March 27th, 2018
