Briefly: Egyptian President Abdel Fattah al-Sisi has agreed to limit the Egyptian military’s role in the economy in order to secure a $3B International Monetary Fund (IMF) bailout. The IMF’s goal is to “[level] the playing field between the public and private sector” to encourage foreign investment. The loan would be the IMF’s fourth to Egypt since 2016.
Egypt’s military economy: Sisi was Egypt’s top-ranking military officer before he took power in a 2013 coup. Since then, Sisi has maintained top officers’ loyalties by awarding lucrative contracts to the military. According to Carnegie Middle East Center, Egypt’s military now “manages approximately one-quarter of total government spending in housing and public infrastructure.”
Intrigue’s take: Egypt’s economy is in bad shape. Year-on-year inflation reached 21.9% in December, and the Egyptian pound’s value has plummeted 40% since March. An estimated 60% of Egyptians live near or below the poverty line. To make matters worse, the Russo-Ukraine War has disrupted supply chains and stunted growth for emerging economies across the Middle East and North Africa.
Also worth noting:
- Egypt owed multilateral institutions $52B as of March 2022, with total external debt obligations of $158B.
- Without support from regional allies – Saudi Arabia, Qatar, and the United Arab Emirates – the IMF expects Egypt to default on its debt.