A study has cast doubt on Egypt's ability to implement the reforms necessary for it to change course on decades of economic struggles.
The policy brief, published by the Washington-based Peterson Institute for International Economics on Tuesday, says Cairo is unlikely to deviate from its “well-rehearsed playbook” of returning to fixed exchange rates, relying on geopolitical rents and permitting its military to be deeply entrenched in the economy.
“Countries reform one day after and that means especially the elites of that country feel that their political survival depends on changing course,” Adnan Mazarei, one of brief's co-authors, told The National.
“At the moment … the leads in the army in Egypt think they can handle the political consequences of the current difficulties."
Egypt's economy has faced numerous challenges in recent years, including high debt levels, inflation and foreign exchange shortages.
Effects from wars in Ukraine and Gaza, as well as the Covid-19 pandemic, have only added to these woes.
To help boost Egypt's economy, the International Monetary Fund in March approved an $8 billion loan package, adding $5 billion to a $3 billion agreement signed in 2022.
The injection helped Egypt to avoid a full-blown crisis, which the authors say could be attributed to its “long-standing insistence on maintaining an overvalued currency through fixed exchange rates”.
“In this as in previous instances, international assistance has been provided at least in part because of Egypt’s critical importance for stability in the Middle East,” said the brief, titled Egypt's 2023-24 Economic Crisis: Will this Time be Different?
As part of the agreement, Egypt raised its interest rates and began floating its currency against the US dollar.
While the policy brief acknowledges action Cairo has taken, it questions if the government is committed to implementing deeper reforms.
It offered two potential scenarios for Egypt.
In the first, it calls on Cairo to implement sustained reforms that include reducing the military's economic dominance, allowing for private sector growth and fair competition, as well as reconsidering the reliance on geopolitical rents.
It also calls on Egypt to abandon the fixed exchange rate.
"Of course, the transition won’t be easy. Inflationary pressures, especially on food prices, are a significant concern," the brief says.
"But with targeted social safety nets, the government can protect the most vulnerable while allowing the economy to breathe."
The other, more likely scenario is one where Egypt returns to fixed exchange rates and other measures it has used in the past.
Elites' interests in the status quo, among other factors, mean it is unlikely that sustained consequential changes are pushed through.
“We are pessimistic,” Mr Mazarei said.
He said it was unclear if the programme could break this cycle.
"Trouble comes, they reach an agreement with the IMF, often involving ... some monetary tightening and some exchange rate depreciation, or sometimes even actual floating at the exchange rate," Mr Mazarei said.
"But then when things stabilise, they go back to their own ways in terms of policies, but they also do not do the deep reforms that are needed."
At the conclusion of its third review of the extended loan programme with Egypt last week, the IMF said some of Cairo's efforts to restore price stability have brought positive results.
But there was still need for more reforms, the IMF said.
It said Egypt must accelerate its divestment programme, pursue reforms to set up new firms, expedite trade facilitation practices and create a “level playing field” that would avoid unfair competitive practices by state-owned firms.
The IMF also repeated the importance of the flexible exchange rate regime.
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Racecard
6pm: The Pointe - Conditions (TB) Dh82,500 (Turf) 1,400m
6.35pm: Palm West Beach - Maiden (TB) Dh82,500 (T) 1,800m
7.10pm: The View at the Palm - Handicap (TB) Dh85,000 (Dirt) 1,400m
7.45pm: Nakeel Graduate Stakes - Conditions (TB) Dh100,000 (T) 1,600m
8.20pm: Club Vista Mare - Handicap (TB) Dh95,000 (D) 1,900m
8.55pm: The Palm Fountain - Handicap (TB) Dh95,000 (D) 1,200m
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About Housecall
Date started: July 2020
Founders: Omar and Humaid Alzaabi
Based: Abu Dhabi
Sector: HealthTech
# of staff: 10
Funding to date: Self-funded
The biog
Favourite food: Tabbouleh, greek salad and sushi
Favourite TV show: That 70s Show
Favourite animal: Ferrets, they are smart, sensitive, playful and loving
Favourite holiday destination: Seychelles, my resolution for 2020 is to visit as many spiritual retreats and animal shelters across the world as I can
Name of first pet: Eddy, a Persian cat that showed up at our home
Favourite dog breed: I love them all - if I had to pick Yorkshire terrier for small dogs and St Bernard's for big
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
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Citizenship-by-investment programmes
United Kingdom
The UK offers three programmes for residency. The UK Overseas Business Representative Visa lets you open an overseas branch office of your existing company in the country at no extra investment. For the UK Tier 1 Innovator Visa, you are required to invest £50,000 (Dh238,000) into a business. You can also get a UK Tier 1 Investor Visa if you invest £2 million, £5m or £10m (the higher the investment, the sooner you obtain your permanent residency).
All UK residency visas get approved in 90 to 120 days and are valid for 3 years. After 3 years, the applicant can apply for extension of another 2 years. Once they have lived in the UK for a minimum of 6 months every year, they are eligible to apply for permanent residency (called Indefinite Leave to Remain). After one year of ILR, the applicant can apply for UK passport.
The Caribbean
Depending on the country, the investment amount starts from $100,000 (Dh367,250) and can go up to $400,000 in real estate. From the date of purchase, it will take between four to five months to receive a passport.
Portugal
The investment amount ranges from €350,000 to €500,000 (Dh1.5m to Dh2.16m) in real estate. From the date of purchase, it will take a maximum of six months to receive a Golden Visa. Applicants can apply for permanent residency after five years and Portuguese citizenship after six years.
“Among European countries with residency programmes, Portugal has been the most popular because it offers the most cost-effective programme to eventually acquire citizenship of the European Union without ever residing in Portugal,” states Veronica Cotdemiey of Citizenship Invest.
Greece
The real estate investment threshold to acquire residency for Greece is €250,000, making it the cheapest real estate residency visa scheme in Europe. You can apply for residency in four months and citizenship after seven years.
Spain
The real estate investment threshold to acquire residency for Spain is €500,000. You can apply for permanent residency after five years and citizenship after 10 years. It is not necessary to live in Spain to retain and renew the residency visa permit.
Cyprus
Cyprus offers the quickest route to citizenship of a European country in only six months. An investment of €2m in real estate is required, making it the highest priced programme in Europe.
Malta
The Malta citizenship by investment programme is lengthy and investors are required to contribute sums as donations to the Maltese government. The applicant must either contribute at least €650,000 to the National Development & Social Fund. Spouses and children are required to contribute €25,000; unmarried children between 18 and 25 and dependent parents must contribute €50,000 each.
The second step is to make an investment in property of at least €350,000 or enter a property rental contract for at least €16,000 per annum for five years. The third step is to invest at least €150,000 in bonds or shares approved by the Maltese government to be kept for at least five years.
Candidates must commit to a minimum physical presence in Malta before citizenship is granted. While you get residency in two months, you can apply for citizenship after a year.
Egypt
A one-year residency permit can be bought if you purchase property in Egypt worth $100,000. A three-year residency is available for those who invest $200,000 in property, and five years for those who purchase property worth $400,000.
Source: Citizenship Invest and Aqua Properties
The specs
Engine: 4-litre twin-turbo V8
Transmission: nine-speed
Power: 542bhp
Torque: 700Nm
Price: Dh848,000
On sale: now
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Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
Killing of Qassem Suleimani
