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Sisi Egypt's President warns tough measures to fix economy are looming

Sisi's government has been at pains to avoid a public backlash by showing that reforms are home-grown and not imposed from outside.

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Egypt's Sisi warns tough measures to fix economy are looming play

Egypt's Sisi warns tough measures to fix economy are looming

(Reuters)
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President Abdel Fattah al-Sisi warned Egyptians on Monday that tough measures would be needed to turn the country's ailing economy around, as the government negotiates a $12 billion loan programme with the International Monetary Fund.

In a bid to prepare public opinion for a series of measures that will include subsidy cuts, tax reforms, and privatisations of state-owned companies, Sisi told Egyptians the government needed their support to weather the storm.

"The problem is whether public opinion is prepared to accept the measures which could be tough or harsh," he told young people at a leadership conference.

"Egyptians love their country and are able to face hardship but they are too busy with their daily lives and thus must be afforded the correct information regarding the measures."

Egypt said last week it was seeking $4 billion a year over three years from the IMF to help plug a funding gap. The government hopes to finalise the deal in August.

Sisi's government has been at pains to avoid a public backlash by showing that reforms are home-grown and not imposed from outside.

Import-dependent Egypt has faced a dollar shortage since the 2011 uprising that ended autocrat Hosni Mubarak's 30-year rule but also scared off tourists and foreign investors, key sources of hard currency.

The gap between the Egyptian pound's official and black market exchange rates has widened to more than 40 percent although news of the loan has underpinned the local currency.

Sisi said on Monday that Egyptians would "very soon" be able to purchase U.S. dollars at a unified rate, adding: "The next few days will see a lot of good news for the Egyptian people."

"In all honesty the dollar in the past five years has become a commodity in Egypt. The government needs to make decisions that will end the commodification of the dollar," he said.

Four traders on the black market said that their volumes of business had fallen as people wait to find out more details about the IMF loan programme and a possible devaluation of the Egyptian pound.

They said they were making only small transactions at a price of 12.30-12.70 pounds per dollar, unchanged from Thursday.

"Some people are worried and others are waiting for the green light on the IMF loan. There is caution in the market over the possibility of the flotation of the pound," said one trader.

"Buying and selling is limited and Sisi's remarks will create apprehension in the market," said another.

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