The International Monetary Fund loan to Egypt does absolutely nothing for the middle and lower classes. To repay the IMF, the country accepts a dire austerity plan and agrees to sell national assets to private investors (economic hitmen). Austerity means cuts in social pensions, social services, employment, wages that directly effect the lower and middle class. Privatization means reducing bureaucracy for foreign investors. The IMF agreement gives them the authority to sell Egypt’s natural resources and infrastructure projects to foreign banks/investors at a premium price in order to repay the IMF.
Core inflation is at seven-year-highs, near 14 percent, as a foreign exchange shortage and a hike in customs duties bite hard in a country that imports everything from sugar to luxury cars.
The government raised electricity prices by 25-40 percent in August and is phasing in a 13 percent value-added tax approved by parliament in the same month.
As part of reforms aimed at clinching a $12 billion IMF loan needed to plug its gaping budget deficit, the government is also expected to cut petrol subsidies and devalue the Egyptian pound, prompting a further cycle of inflation in Egypt, where tens of millions rely on state-subsidized bread.
“Prices are rising daily, not monthly,” said Gamal Darwish, a civil servant, as he queued to buy subsidized sugar in Cairo.
“This situation will push people to do bad things. It could slip out of hand and the government will not be able to control it because if the poorest cannot get enough to eat they will steal. If someone has children to feed, what will he do?”
The government has tried to win public support for the austerity measures with a billboard campaign and media blitz and has also sought to expand social security schemes to shield the poorest from the effects of the rising prices.
But many Egyptians who would not qualify for such schemes complain they can no longer afford meat, while sugar shortages have driven fears of an impending food crisis.