Bitterness as Egypt rolls out economic reforms

CAIRO — Facing a weeks-long shortage in a country already restless with rising prices, Egyptian authorities this week raided a Twinkies snack cake factory and confiscated its sugar stocks — all 2,000 tonnes. The raid Sunday on Edita Food Industries, one of Egypt”s largest producers, came as discontent with increased food prices and empty shelves bubbles to the surface in the most populous Arab country. With two presidents deposed in six years, political turmoil has left the country”s economy in deep crisis. Egypt, its latest President Abdel Fattah El-Sisi has suggested, is facing a moment of truth when tough, long-deferred economic reforms can no longer be avoided. Sugar is only the latest good to see shortages — before it was rice, cooking oil, baby formula and medicines. Authorities have accused companies of hoarding and promised to resell seized stocks at lower prices. But patience is already wearing thin. “Before the presidential election we had enough sugar and rice to export, what happened?” a motorized rickshaw driver asked in an online video that went viral among Egyptians, prompting the government to offer to meet with him. Outside a bakery in Cairo’s Maadi suburb on a recent weekday, a small crowd complained about rising prices. “We’re seeing bitter times,” said Umm Mahmoud, a cleaner, as she bought bread. “I voted for Sisi. He is making projects, but they’re not for us,” she said, referring to schemes like an expansion of the Suez Canal. And frustration is likely to grow as Sisi, who overthrew his Islamist predecessor Mohamed Morsi in 2013, rolls out an austerity program including subsidy cuts in return for a $12 billion loan from the International Monetary Fund. Egypt’s international reserves were up to $19.6 billion in September, an increase from previous years but less than 50 percent of the early 2011 level, before an uprising unseated Hosni Mubarak. Much of the money went to propping up the pound against the dollar with incremental devaluations well short of the rates offered by the black market, increasingly the only recourse for importers. The reforms, such as devaluing the pound and cutting subsidies, have long been demands of investors and international creditors. “What the government is trying to do over the last period is to get the IMF loan and utilize a decent level of financing to resolve the shortages of foreign exchange and mispricing,” said Mohamed Abu Basha, an economist with EFG Hermes investment bank. — AFP