Last Updated: Tuesday, 15 April 2014, 16:25 GMT

Egypt: Poor hit hardest as political tensions persist

Publisher Integrated Regional Information Networks (IRIN)
Publication Date 26 December 2012
Cite as Integrated Regional Information Networks (IRIN), Egypt: Poor hit hardest as political tensions persist, 26 December 2012, available at: http://www.refworld.org/docid/50eab39f2.html [accessed 16 April 2014]
DisclaimerThis is not a UNHCR publication. UNHCR is not responsible for, nor does it necessarily endorse, its content. Any views expressed are solely those of the author or publisher and do not necessarily reflect those of UNHCR, the United Nations or its Member States.

For the first time in months, Hussein Mohamed, a 50-year-old civil servant from the Giza Governorate neighbourhood of Imbaba, northern Cairo, has had to tell his wife that he can no longer put food on the table.

Mohamed used to find ways to get by on the small salary he receives, but with soaring food prices this is becoming increasingly tough.

"I find it hard to say that I can't feed my family, but this is the reality," Mohamed, an administrative worker from Cairo University, told IRIN. "I am so tired and feel that I won't be able to keep going."

Food prices in November were up 5.3 percent on the same month last year, while market traders reported a doubling of many prices since the summer for basics like onions, rice and pasta.

Mohamed and millions of vulnerable Egyptians are coming to learn a painful lesson: they are the first to pay the price of continued political tensions which have brought with
Egypt started a new phase of political and security turmoil on 22 November when its first democratically elected president, Mohamed Morsi, issued a decree to exempt his decisions from judicial scrutiny, and tensions persisted as millions voted in a controversial constitutional plebiscite this month.

"Egyptians' food security is in real peril," Rashad Abdo, an economics professor from Cairo University, told IRIN. "Our country imports most of its food. The problem is that our foreign currency reserves - necessary for buying this food from other countries - are hitting rock bottom."

Egypt's foreign currency reserves dropped to US$15 billion by the end of November, from US$36.1 billion on the eve of the popular uprising that ousted former president Hosni Mubarak early last year.

Economists like Abdo say these reserves will allow the government to buy food for the people for three months only.

"This means that our country is galloping on the road to an economic crisis at best, bankruptcy and famine at worst," he said.

Last week the government confirmed it would be importing 180,000 tons of wheat from the USA - being one of the world's biggest wheat importers is a big strain on reserves.

Gloom

As debates around the constitution rage, economic issues are increasingly prominent.

"Factories are closing down, poverty is rising and a large number of people are losing their jobs," Victor Fikry, deputy chairman of Catholic charity Caritas Egypt told IRIN.

The charity says that in the last few months it has seen the number of people demanding small loans rise, but also a halving of donations.

Khaled Waked, a 49-year-old father of two, used to think his job at a calibration company was safe, after two decades at the company. A few months ago, however, he was made redundant because the company had no money to pay him.

"I don't know which way to turn," Waked said. "The economy suffers and this means that jobs are rare. But suppose there are openings, who will hire an old man like me?"

There is no official estimate about the number of Egyptians like Waked who lost their jobs in the months that followed the revolution, but the African Development Bank says unemployment rose to 12.6 percent of the workforce (3.4 million people) in the second quarter of 2012. (Arabic)

Another sector hit by the political turmoil is tourism, which normally accounts for about 11 percent of gross domestic product (GDP) and "is the most important source of foreign exchange earnings for the national income at 20%."

Economists, however, say the worst may be yet to come.

"An economic crisis means that jobs will become scarcer and prices higher," said Yumn Al Hamaky, an economics professor from Ain Shams University. "At the end of the day you will have more people who cannot satisfy the most basic of their needs.

Around 25.2 percent of Egypt's 83 million people were in poverty in 2010-2011, compared with 21.6 percent in 2008-2009, according to the Egyptian government.

A rapidly growing budget deficit, now at 170 billion pounds ($27.5 billion) and expected to rise to 200 billion pounds ($32.3 billion) soon, does not bode well for the future, Al Hamaky said.

Mismanagement

Economists blame the economic downturn on poor economic management and a lack of clear economic policies.

The government seeks to reduce the budget deficit to 8.5 percent from 11 percent of GDP by the end of fiscal year 2013-2014. To do this, it has taken several measures, including slashing the subsidies on fuel for expensive cars and factories, but at the same time raising the price of electricity and gas cylinders. (Arabic)

"All these measures will end up harming the poor, rather than the rich," said economist Alia Al Mahdy. "Factories that pay more for fuel, for example, will raise the prices of their commodities and this will harm the poor even more."

The government decided on 10 December to raise taxes on dozens of commodities and services, including fuel, cigarettes, mobile phone communication, and fertilizers, causing uproar and spreading fear across this country. A few hours later, however, the president suspended the decision. (Arabic)

In a comic, but also bitter, expression of public outrage at the state of confusion that grips government policies, a pop singer has recently ridiculed the president in a hit in which she says the president takes decisions in the morning, only to cancel them in the evening. (Arabic)

But this is no laughing matter for people like Mohamed, the Cairo University administrative worker. When he went to the vegetable market a few hours after the president suspended the tax rise, he discovered that the prices of almost all vegetables and fruit had doubled.

"I bought one kilo of green pepper for 2.5 pounds (40 US cents) only one day before the government announced its decision to raise the taxes," Mohamed said. "The next time I went to the market, the price reached five pounds. The same thing happened with all other vegetables and fruit, even as the president suspended the decision."

Mohamed, whose salary is 1,800 pounds ($291), says rising prices oblige him to stop buying certain food items and stick only to the basics.

"I give up one more item every day," he said. "I am sure I will continue to do this until nothing more is left for me and my family to eat.

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