President Abdel-Fattah Al-Sisi is in Russia this week to participate in the 16th BRICS Summit, held in the city of Kazan from 22 to 24 October. This is the first time for Egypt to attend the BRICS Summit after it had officially joined the economic bloc in January 2024. The summit is held under the motto “Strengthening Multilateralism for Just Global Development and Security”.

In his speech before the summit, President Al-Sisi was scheduled to focus on the issue of reforming the global financial structure to achieve the interests of developing countries in light of the growing negative impact of international conflicts and crises on the development process in these countries, said Presidential Spokesman Ahmed Fahmi.

Al-Sisi’s speech, added Fahmi, was also set to review Egypt’s efforts in the area of achieving economic reform and creating an investment-friendly climate.

During his time in Russia, Al-Sisi was scheduled to meet with his Russian counterpart Vladimir Putin and with Iranian President Masoud Pezeshkian, Iranian state news agency IRNA reported, to discuss bilateral relations and regional and international issues of mutual interest.

Media reports agree that the BRICS summit would debate moving forward with the process of de-dollarisation — or restricting the use of US dollar in favour of increasing the use of local currencies in settling financial deals among the group’s member countries. The BRICS summit was also set to discuss promoting the role of the group’s New Development Bank to help member countries break free of the US-dominated IMF and World Bank and rewrite rules of financing global development.

President Al-Sisi directed a rebuke to the IMF this week as the conditions of its loans place unbearable pressure on the public.

Speaking at the 2024 Global Congress on Population, Health, and Human Development on Sunday, Al-Sisi said Egypt may “review the situation” vis-à-vis its loan programme with the International Monetary Fund (IMF) given ongoing regional challenges.

“Egypt is implementing the current economic reform programme amid very difficult regional and international circumstances. If these challenges mean placing unbearable pressure on the public then we will have to review the situation with the IMF,” he said.

Egypt has lost between $6-7 billion in the past 7-10 months, pointed out Al-Sisi, and the losses “may continue for another year because of the fallout [from regional turmoil] that we are experiencing”.

Egypt, he noted, has entered into two economic reform programmes, the first in 2016 when the nation achieved success thanks to its efforts as well as regional and international stability, and “the second programme, which we are currently implementing, but which comes amid extremely challenging regional and global circumstances which have negatively impacted the global economy and are expected to cause an economic recession that could last 10 years.”

Egypt signed an Extended Fund Facility (EFF) arrangement with the IMF in December 2022 and in March this year increased the facility from $3 billion to $8 billion in order to ease the pressures caused by regional turbulence and the ongoing global economic downturn.

In September, Al-Sisi pointed out income from the Suez Canal had fallen by 60 per cent over the previous 7-8 months as a result of regional conflicts.

It is not the first time the president has made such comments. After the war in Ukraine and subsequent worsening of global economic conditions, Al-Sisi urged the IMF to review its reform conditions because of their impact on the lives of citizens.

Egypt has been embroiled in an economic crisis since 2022. Foreign debt has ballooned, the currency has undergone several devaluations and inflation has spiralled.

After increasing its loan to Egypt to $8 billion this year, the Washington-based IMF demanded wide-ranging reforms, including a shift to a more flexible exchange rate, boosting the role of the private sector, phasing out subsidies and reduction of government debt. The government has been able to successfully implement the first two parts of the programme but is facing difficulties when it comes to phasing out subsidies.

Al-Sisi was speaking two days after the Ministry of Petroleum announced fuel hikes of up to 17 per cent, the third increase this year as the government moves to end fuel subsidies by the end of 2025, and a month after the government raised electricity prices by 40 per cent.

“The last increase in fuel prices was particularly significant, sparking wide dissatisfaction among the public,” said the head of parliament’s Budget Committee Fakhri Al-Fiqi.

“The president’s directives aim to strike a balance between reforming the economy and the ability of citizens to shoulder the burden of the reforms.”

Friday’s price hikes included diesel and mazut, used in mass transport and industry. Transport fares immediately increased in response.

Inflation peaked at nearly 40 per cent last year but dropped to 26.4 per cent in September.

Egypt has received three tranches of its IMF package. The Washington-based lender said earlier this month that its next review mission, initially set for September, would now take place next month. Upon completion of the fourth review, Egypt is expected to receive $1.3 billion as part of the EFF.

Al-Fiqi says Al-Sisi’s recent statements send a message to the government, and the “ministerial economic group” in particular, that in their next round of meetings with IMF officials they should argue to temper the IMF subsidy reform programme. “Any further liberation of prices might cause political unrest,” said Al-Fiqi. He also expects that the government will introduce a new package of social safety measures, including increases to salaries and pensions.

Prime Minister Mustafa Madbouli vowed on Saturday that if global oil prices stabilise at an average of $73 per barrel there will be no further fuel hikes until March 2025.

Madbouli earlier said that Egypt would be forced to adopt a “war economy” if a war erupted in the region anytime soon. Oil prices have increased by 10 per cent over the past week, he said, adding that the price could jump to over $100 a barrel if conflicts in the region continue to escalate.

According to Madbouli, the IMF’s decision to delay its fourth review of Egypt’s economic reform programme was due to the fact that the fund will be busy preparing for its annual meetings, held between 21 and 26 October. Governor of the Central Bank of Egypt Hassan Abdallah and Finance Minister Ahmed Kouchok will attend the meetings in Washington and speak with officials there, said Madbouli.

Some media outlets cited an anonymous government official as saying that the Madbouli government has asked the IMF for an extension on the timeline for the implementation of economic reforms that were agreed upon as part of our loan programme. The reforms will still be implemented, “but over a longer time frame,” the outlet quotes the official as saying.

Cabinet Spokesperson Mohamed Al-Homosani underlined that Egypt’s loan programme with the IMF reflects the country’s reform needs.

“This is a 100 per cent Egyptian economic reform programme and it is the government — not the IMF — that decided to hike fuel prices,” said Al-Homosani.

Economic commentator Medhat Nafie says the government could form an independent committee to re-evaluate the loan programme with the IMF and assess the challenges it could face.

“Many countries — Argentina and Greece, for example — have reviewed their loan programmes with the IMF when they found out they could have economic and political consequences that impact internal stability,” said Nafie.

Economic expert Mustafa Badra argues that “there must be new negotiations to postpone the implementation of IMF conditions until regional conflicts come to an end” and to alleviate burdens on the public.

This is not the first time Egypt has faced an economic crisis, Al-Sisi told attendees of the Global Congress on Population, Health, and Human Development. In 2011 Egypt faced a difficult economic situation, chaos, instability, and terrorist threats, “but we were able to surmount the crises and find solutions.”

He pointed out that despite all challenges, including runaway population growth, Egypt had been able to reduce the unemployment rate to 6.5 per cent “by exerting great efforts to build a robust infrastructure to create jobs.”

“We are also implementing a very ambitious programme over 10 years, with huge investments, to build advanced triple treatment plants to meet our growing population’s need for water.”

He also drew attention to Egypt’s success in eliminating hepatitis C. Egypt, he said, “had turned from having one of the highest hepatitis C burdens in the world to being a country free from hepatitis C.”

* A version of this article appears in print in the 24 October, 2024 edition of Al-Ahram Weekly