The government is doing its best to minimise the severity of the ongoing economic crisis triggered by the Covid-19 pandemic and the Russia-Ukraine war, said President Abdel-Fattah Al-Sisi in a speech at the Egyptian Military Academy on Saturday.
“We are not the cause of this crisis, but I am sure we will be able to get over it,” said Al-Sisi, revealing that the government is preparing a new package of measures to mitigate the impact of inflation on the lives of ordinary citizens.
Despite difficult circumstances the government is determined to find lasting solutions for the economic crisis which, said the president, will come through ambitious plans to reduce imports and double industrial and agricultural production.
In a bid to improve food security, the government will begin cultivating three million feddans in the new Delta, Sinai, and Toshka within months. Al-Sisi cautioned, however, that even with additional local agricultural production, Egypt will still need to import large quantities of basic commodities — particularly corn, wheat, and edible oils — to meet local consumption.
Egypt’s annual consumption of wheat is expected to reach 20 million tons in the next few years, leaving the country with no choice but to import at least half of its needs. In terms of cooking oil, Egypt depends on international markets to secure 90 per cent of local consumption.
President Al-Sisi said the government is endeavouring to ensure stocks of basic food commodities cover a minimum of six months of consumption to avoid disruption to supplies.
“We must meet the food needs of 105 million Egyptians and nine million foreigners who are living on our land,” said Al-Sisi, before warning that “unless the country works hard to boost exports and cut imports, we will continue to suffer.”
The Ministry of Finance last week inked a $500 million five-year financing agreement with the UAE’s Abu Dhabi Exports Office (ADEX), a financial arm of the Abu Dhabi Fund for Development (ADFD), to finance wheat imports. Supply and Internal Trade Minister Ali Moselhi said this week the agreement aims to double wheat stocks.
Egypt expects to import 12 million tons of wheat during FY 2023-24, which started on 1 July, according to a report by the Food and Agriculture Organisation released in July.
Egypt, said Al-Sisi, also needs to import “half a million tons of mazut costing $350 million per month to operate power plants at full capacity, another fact which exerts pressure on our foreign exchange reserves.”
Many analysts expect that the Fuel Automatic Pricing Committee (FAPC) will keep fuel prices unchanged for Q3 of 2023. The committee, which meets every three months, last raised diesel prices in May by LE1 to LE8.25 per litre but maintained all other gasoline prices. “We have 10 million cars moving across Egypt daily, and we need to get them the required fuel, of which we also import a large part,” Al-Sisi said.
Last Thursday the cabinet postponed increasing electricity prices for households for another six months (until 1 January 2024). Electricity prices were last increased in July 2021, and though Egypt had planned to eliminate power subsidies by the end of fiscal year 2021-22 this timetable has now been extended to 2025.
Responding to a question on how long the economic crisis will last, Al-Sisi said that “only with patience, perseverance, planning, and determination we will be able to get over this economic crisis” before adding that at some point “it will, like all the crises and challenges we have faced before, be history, because we are walking on the right path, the road of development.”
The president also referenced Egypt’s submission of a bid to join the BRICS (Brazil, Russia, India, China and South Africa) organisation.
“In submitting a bid to join this economic bloc we are trying to strike a balance in our foreign relations,” he said.
“We have good relations with the West and the United States, and at the same time we have good relations with the East. In my speech at the recent Africa-Russia Summit in St Petersburg I was keen to stress that African nations are not interested in joining any politically-motivated foreign axes.”
* A version of this article appears in print in the 24 August, 2023 edition of Al-Ahram Weekly