Egypt’s economy, once buoyed by a thriving middle class and ambitious development projects, now finds itself in the grips of a prolonged crisis. Amid a series of International Monetary Fund (IMF)-backed economic reforms, the middle class, long considered the backbone of the Arab world’s most populous nation, is crumbling under the weight of rising costs and dwindling purchasing power.
From household essentials to minor luxuries, many Egyptians are struggling to afford what were once considered basics. The IMF’s recommendations—liberalizing the currency exchange, reducing subsidies, and implementing fiscal austerity—have intensified a years-long economic crisis that shows little sign of easing.
For 27-year-old Nourhan Khaled, even modest indulgences like perfumes and chocolates are out of reach.
“All my salary goes to transport and food,” she lamented while shopping at a supermarket in western Cairo. She paused over her cart, weighing each item’s necessity.
Similarly, Zeinab Gamal, a 28-year-old housewife, has had to cut back on her family’s consumption of basic items like milk.
“We don’t buy sweets anymore and have reduced milk consumption,” she said, pointing to the sharp trade-offs her family faces daily.
These adjustments underscore a seismic shift in lifestyles, particularly among the middle class. Manar, a 38-year-old mother of two, recalled the stark contrast between her childhood and her family’s current struggles.
“The lifestyle I grew up with has completely changed,” she said. Despite taking a part-time teaching job to increase her household income to 15,000 Egyptian pounds (around $304), her family now views children’s sports activities as a “luxury.” Even meat consumption has been slashed, with meals that once featured it four times a week reduced to just two.
In August, Egypt raised fuel prices for the third time in 2024, with a 17.5% hike that exacerbated transportation and living costs. These measures are part of an $8 billion IMF loan program, which was expanded this year from an initial $3 billion to address Egypt’s dire economic situation.
While the IMF advocates these policies as necessary for stabilizing the economy, their implementation has led to skyrocketing prices for food, medicine, and transportation. Experts and citizens alike warn of severe repercussions for the average Egyptian.
“The current reforms have had a more intense effect on people compared to previous rounds,” said Wael Gamal, director of the social justice unit at the Egyptian Initiative for Personal Rights. He suggested a more gradual implementation could have mitigated some of the fallout.
Foreign debt has quadrupled since 2015, now standing at $160.6 billion in the first quarter of 2024. Much of this debt has been funneled into ambitious infrastructure projects, including a sprawling new administrative capital east of Cairo. Critics argue that while these projects may promise long-term benefits, they have contributed to the current fiscal strain without providing immediate relief to citizens.
The ongoing war in Gaza has compounded Egypt’s woes. Huthi rebel attacks on Red Sea shipping, carried out in solidarity with Palestinians, have slashed revenues from the Suez Canal—a vital source of foreign currency—by over 70% this year.
Public frustration with rising costs and dwindling incomes has prompted officials to signal potential changes to the IMF-backed program. Last month, President Abdel Fattah al-Sisi hinted at the need for a re-evaluation.
“If these challenges will make us put unbearable pressure on public opinion, then the situation must be reviewed with the IMF,” Sisi said. Prime Minister Mostafa Madbouly also assured citizens that no further financial burdens would be imposed “in the coming period,” though he offered no specifics on timing.
Egypt’s current predicament is not without precedent. In 2016, the government embarked on a three-year, $12-billion IMF loan program that led to significant reforms, including the first in a series of currency devaluations. The Egyptian pound has since lost much of its value, with one U.S. dollar now worth more than 49 Egyptian pounds.
While poverty rates officially dropped from 32.5% in 2019 to 29.7% in 2020, these figures fail to capture the growing ranks of a struggling middle class. Many who previously enjoyed financial stability now grapple with daily challenges.
“Two years ago, we had no trouble affording basics,” said Manar. “Now, I think twice before buying essentials like food and clothing.”
Earlier this month, IMF Managing Director Kristalina Georgieva defended the program’s long-term goals, claiming that reforms would lead to “a more dynamic, more prosperous Egyptian economy.” However, the delayed IMF review of the loan program underscores lingering concerns about its implementation. If completed, the review could unlock $1.2 billion in additional financing for Egypt.
Despite these assurances, ordinary Egyptians remain wary. For Manar, optimism feels far-fetched. Her family relies on her brother, an expatriate, to send basic items like instant coffee, which now costs 400 pounds ($8) per jar.
“All I can think about now is what we will do if there are more price increases in the future,” she said.
Wael El-Nahas, an economist and capital market specialist, described the IMF loan program as a “bitter pill to swallow.” Yet, he acknowledged its role in compelling the government to adopt systematic reforms.
“The IMF provides a crucial tool for discipline,” he said. “But the pace of reforms needs to account for social realities.”
Echoing this sentiment, Gamal from the Egyptian Initiative for Personal Rights stressed the need for a slower, more deliberate approach.
Egyptian expatriates send home an estimated $30 billion annually, a vital lifeline for families struggling to make ends meet. Still, this influx of foreign currency is not enough to stem the tide of hardship. For the once-thriving middle class, the erosion of living standards has created a precarious existence.
As Egypt grapples with its worst economic crisis in decades, the divide between economic reforms and public well-being has widened. For many, the sacrifices demanded by IMF-backed measures feel unsustainable, turning everyday essentials into unattainable luxuries.
