Egypt’s economy is in free fall, and with it the middle class – 17.01.2023 04:41

‘It happened like a bolt of lightning and we had to cut corners’: Egypt’s middle class nears poverty line amid devaluation and inflation.

Manar, a mother of two, has given up on overseas holidays and is now wondering about her future in a country embarking on painful reforms demanded by the International Monetary Fund (IMF).

“Our way of life is gone, now we only think about the price of bread or eggs,” the 38-year-old housewife told AFP, declining to give her last name.

With the Egyptian pound halving since March, inflation rose to 21.9% in December and food prices rose 37.9%, according to official figures, with most goods imported.

But for Johns Hopkins University professor and hyperinflation expert Steve Hanke, inflation is effectively 101% on the official and black market, according to his calculations that take into account purchasing power and exchange rates.

– “I’ve never experienced this before” –

A worker counts banknotes at a currency exchange in Cairo on November 3, 2016. (AFP / KHALED DESOUKI)

And as in the brutal devaluation of 2016, again the middle class and the poorest are on the front line for IMF credit.

Already at that time, President Abdel Fattah al-Sisi spoke of “the toughest program of economic reforms in Egypt” and called on the mother and her victims to hold the purse strings.

But “military discipline” is not enough for Salma, a 41-year-old translator who prefers to testify under a pseudonym.

“My husband’s salary lost 40% of its value in six months,” she told AFP. And cutting back on groceries allows her six-year-old son to make only a margin against her six-year-old son’s “monthly payments for house, car and school fees”.

Helping many families with the Abwab El Kheir association, Ahmed Hicham saw a new audience coming.

An Egyptian weighs potatoes in a Cairo market on March 17, 2022 (AFP / Khaled DESOUKI)

“Many had savings for their children or later. Today, they’re digging into that for health expenses or daily expenses,” he said.

Most, he says, are “private sector workers”, more generous than public services, “earning £4,000 to £6,000 a month” (between €125 and €185).

“They’ve never experienced it, and it hurts them to come to us,” she says.

“There is even a man who told us that he had to choose between feeding his children or paying for their education.”

Before the recent devaluation, 60% of the 104 million Egyptians were below or slightly above the poverty line, according to the World Bank.

– “There is no other way out” –

Soha Abdelaty of the American University in Cairo admits that the middle class is “hard to define” amid Egypt’s notorious inequality.

But one thing is certain: “with a sudden increase in inflation, those who are far from the poverty line could get closer to it”, the average annual salary officially reaches 2150 euros.

An Egyptian works at a bakery in a Cairo market on March 17, 2022 (AFP / Khaled DESOUKI)

“These are people who can no longer make ends meet, but still cannot receive public assistance,” the expert continues.

For graduates, “there is no other way out except for work abroad,” translator Salma assures, adding that explanations about job offers in the Gulf or equivalency degrees in Europe have spread on social networks.

Those who succeed join the ranks of emigrants who send about 30 billion euros to Egypt every year.

For those who can’t go like Manar, the priority is education — in the private sector, the quality of education in the public sector is low.

“You have to pay at least £20,000 to £40,000 (€625 to €1,250) per year in primary school to make sure your child learns something,” says Manar.

“The problem is, we don’t know if it’s going to end there,” he continues.

“We have to be ready to sell everything… hoping for a better future for our children.”