After four years of liberalizing the exchange rate and betting on the recovery of the local economy through an austerity reform program, Egypt has succeeded in achieving some growth, unlike all surrounding countries, but large numbers of Egyptians are still living in extreme poverty.

In April, Jaber, a 36-year-old Egyptian Al-Saidi, was fired from the hotel he used to work in in the tourist city of Hurghada after travel and tourism stopped due to the COVID-19 pandemic. "I might get another chance after the end of the pandemic," he told AFP. "I support four children, my wife and my mother."

Then he adds, "It is sometimes difficult to include meat in our meals, because of the prices and conditions."

However, in its report issued last month, the International Monetary Fund raised its expectations regarding the expected growth rate in Egypt by the end of this year to 3.6 percent instead of 2 percent, indicating that Egypt will be the only country in the Middle East and North Africa region that will achieve a positive growth rate.

The Egyptian economy achieved a growth of 5.6 percent by the end of 2019. The Egyptian government had expected it to reach 6 percent by the end of this year, but the COVID-19 pandemic, which has recorded 108,122 injuries in Egypt, including 6305 deaths, prevented that.

The float is part of an economic reform program launched by the government since 2016, under which it obtained a $12 billion loan from the International Monetary Fund, and included other measures such as canceling energy subsidies and imposing new taxes.

The director of the Delta Research Center in Cairo, an economic analyst, Ahmed El-Safty says that the liberalization of the exchange rate, which led to the depreciation of the Egyptian pound by nearly half, had a role in pushing the rate of growth, as it contributed to the increase in some elements of the balance of payments, such as tourism and remittances from Egyptians abroad that take place in foreign exchange.

He adds that the central bank’s decision to raise the interest rate while its rate was low in other countries led to "an increase in foreign investments in government securities, especially treasury bills."

He notes that raising the interest rate after the exchange rate stabilized and the Central Bank of Egypt guaranteed that foreigners would recover their money whenever they wanted to "attract many investors even in light of the COVID-19 pandemic."

According to statistics from the Central Bank of Egypt, tourism revenues increased, to record during the fiscal year 2018-2019 about 12.6 billion dollars, surpassing the revenues of 2010.

Remittances from Egyptians abroad reached a historical level in 2019-2020, reaching about $28 billion, according to official bank statistics.

- 'Repair bill' -

However, these incomes, investments and growth did not succeed in reducing the poverty rate that rose in the country. The epidemic has further complicated the situation, especially for workers in the informal sector, who number about four million, according to the Egyptian Statistics Authority, and they are now threatened with losing their jobs.

Official statistics indicate that the poverty rate in Egypt reached 32.5 percent in 2017-2018, compared to 27.8 percent in 2015, an increase of 4.7 percent.

"Repairs have a bill, but the price would have been more exorbitant if the government had not implemented them," al-Safti says.

However, some analysts warn against "misleading."

"The state-run social programs are a drop in the ocean, and they do not succeed in reaching millions of needy," political economist Sarah Smershak said.

"The figures presented by the international financial institutions are very misleading," says Smershak, explaining that the fiscal year in Egypt runs from July 1 to the end of June. Accordingly, the fiscal year 2019-2020 was affected by only a few months in the period of the COVID-19 crisis that began in the most populated Arab country (one hundred million people) in March, while the fiscal year coincides with the calendar year in most other countries of the region. Which explains its poor growth rates.

If Al-Safti confirms that the large government spending on infrastructure projects has contributed to supporting the growth rate in real terms, Smershak, a previous lecture at Oxford University, indicates that the major projects implemented by the government were largely financed through borrowing. Thus, Egypt must pay off these debts, which means that "the numbers that increase the GDP now must be paid with interest in the future."

Since Egyptian President Abdel Fattah El-Sisi took office in 2014, he has focused on developing infrastructure and building new cities, as well as an administrative capital in eastern Cairo.

"It would have been good if the money (debt) were to be invested in projects that are expected to generate large and sustainable returns, but this is unlikely to be the case with current plans," Smerchak says.

Egypt's foreign debt increased, according to the latest official statistics, to $111.2 billion, compared to $48 billion in 2015.

Jaber says that the major projects implemented by the government "are very good and provide job opportunities for some people and will make Egypt look new, but there is a large group of people that may not benefit."