Why Egypt asks its citizens to eat chicken feet

Abu Dhabi (CNN) — Egypt’s economic situation is so dire that the government is asking people to eat chicken feet.

The Arab world’s most populous nation is suffering from an unprecedented currency crisis and the worst inflation in five years, driving food prices to such an extent that many Egyptians can no longer afford chicken, a staple in their diet.

Poultry prices went from 30 Egyptian pounds ($1.01) per kilogram in 2021 to 70 Egyptian pounds ($2.36) on Monday, according to state media.

The rising cost has prompted the nation’s National Institution of Nutrition to ask people to switch to eating chicken feet.

“Looking for cost-saving protein-rich food alternatives?” he asked in a Facebook post last month, listing a number of products, starting with chicken feet and beef.

Many Egyptians are infuriated that the government is asking citizens to resort to food that is a symbol of the country’s extreme poverty. In Egypt, chicken feet are considered the cheapest of meat items, considered by most to be animal waste rather than food.

“(We have entered) the era of chicken feet, the collapse of the Egyptian pound… and drowning in debt,” Mohamed Al-Hashimi, a media personality, tweeted to his 400,000 followers.

But others appear to be following the call. Following the recommendation to eat chicken feet, the price of a kilogram of the product would have doubled to 20 Egyptian pounds (US$0.67).

The authorities say that about 30% of the Egyptian population is below the poverty line. However, the World Bank estimated in 2019 that “about 60% of Egypt’s population is poor or vulnerable.”

Here’s what you need to know about Egypt’s economic spiral:

How did Egypt get here?

Egypt has been through several financial crises in the past decade, forcing it to seek bailouts from creditors including the International Monetary Fund (IMF) and Gulf Arab allies.

But the country has been trapped in a debt cycle that analysts say has become unsustainable. Its debt amounts this year to 85.6% of the size of its economy, according to the IMF.

Some of the factors contributing to the failure of the Egyptian economy are the disproportionate role of the army, which analysts say weakens the private sector, as well as the allocation of large sums to mega-projects such as the tallest tower in Africa and a new capital in the desert that houses a defense ministry that authorities say is bigger than the Pentagon.

The Egyptian economy has suffered a severe blow in the past two years, when the effects of the covid-19 pandemic and the war in Ukraine depleted its foreign reserves and the rise in fuel prices triggered inflation.

The pandemic caused investors to withdraw $20 billion from Egypt in 2020, and the economic fallout from the Ukraine war caused a similar amount to leave the country last year, according to Reuters.

“Twenty billion dollars is the equivalent of every penny Egypt has borrowed from the IMF since 2016, and it was gone in weeks (last year),” said Timothy Kaldas, a non-resident policy fellow at the Tahrir Institute for Policy. of the Middle East in Washington.

Those events contributed to the currency crisis that Egypt is facing today. The Egyptian pound has lost nearly half its value in the past year, briefly hitting 32 pounds to the dollar last week, its lowest ever.

In its most recent economic bailout agreed in December, the IMF lent $3 billion to Egypt, which hopes to catalyze another $14 billion of support from Egypt’s international and regional partners, including oil-rich Gulf nations.

What does the IMF need Egypt to do differently this time?

This year’s IMF loan was conditional on Egypt implementing a series of structural reforms. And this time, the moneylender is facing off against the mighty Egyptian Army.

In addition to introducing a flexible exchange rate — which would allow the value of the currency to be determined by the market rather than the central bank — the IMF also called for Egypt to reduce the role of the state, including the military, in the economy, and slow down national projects to limit pressure on the currency, as well as inflation.

“What’s unique is that it also encompasses Egypt’s military companies,” wrote Yezid Sayigh, a senior fellow at the Malcolm H. Kerr Carnegie Center for the Middle East in Beirut, Lebanon. “This contradicts the initial impression given by the loan agreement announcement in October 2022, that the IMF had not used its influence to put military companies on the agenda.”

The IMF also required all companies, including those owned by the military, to publish an annual report “with details and estimates of tax exemptions and rebates.”

It remains to be seen if these reports will ever be published. Kaldas says many Egyptians want to know how wealthy the military is and also “how much risk is involved in Egypt’s military economic empire.”

“One of the challenges right now in understanding Egypt’s level of economic risk is that we don’t know how much money military companies have borrowed,” he said.

Why is the role of the military in the economy so controversial?

egypt economy

Skyscrapers, including the Iconic Tower, in the center, in the central business district of the New Administrative Capital of Egypt, east of Cairo, Egypt, on Wednesday, July 27, 2022. Credit: Islam Safwat/Bloomberg/Getty Images

According to Kaldas, the Egyptian private sector has contracted in the last seven years.

The S&P Global Egypt Purchasing Managers’ Index (PMI) for December, which measures the health of Egypt’s private non-oil sector, showed a “solid deterioration”, holding below the 50 mark needed to healthy economic growth for 25 consecutive months.

The Egyptian Army owns and operates a large number of companies with which the private sector finds it difficult to compete. From gas stations and pharmaceuticals to meat and dairy, military-owned businesses account for a large proportion of the Egyptian economy.

But those companies do not operate as private companies, instead enjoying special privileges without disclosing their financial data to the public.

The military also spearheads President Abdel Fattah el-Sisi’s vast national projects that critics say have sucked up much of Egypt’s funding.

Authorities have promised to list state-owned companies, including military-owned ones, in a plan aimed at involving the private sector in their management. The plan has not yet been fully implemented, and analysts are skeptical about it, given the secrecy with which these companies often operate.

Is Egypt likely to heed the IMF appeal?

Sayigh of the Carnegie Middle East Center says the delay in listing military-owned companies and disclosing their financials is evidence of the military’s opposition to the conditions imposed.

Experts have wondered why international creditors have not leveraged their loans to drive the Egyptian military out of the economy. It is a powerful institution in Egypt, both financially and politically.

Sisi came to power only after the backing of the military. The former captain general was at the helm of the 2013 military coup that overthrew former president Mohamed Morsy, the country’s only democratically elected president.

In statements Speaking to CNN’s Becky Anderson in Abu Dhabi on Monday, Egyptian Foreign Minister Sameh Shoukry said that state-owned companies “will be sold to the private sector to encourage new investment” and that Egypt “has the support of the IMF in this sense”.

Asked how soon the government would review the military’s involvement in the economy, Shoukry said Egypt is tackling the challenges in a “holistic way” while “recognizing the social dimension” at the heart of the country’s financial problems. country.

Kaldas of the Tahrir Institute said the government can circumvent IMF conditions by introducing changes that look like compromises but don’t change the structure of the economy.

“If everything stipulated in the agreement is fulfilled, the role of the army in Egypt will almost certainly be reduced,” he said.

Why should the rest of the world care?

When Egypt devalued its currency in October, the US embassy in Cairo issued a “demonstration alert,” warning of possible unrest.

More than a decade ago, Egypt and other Middle Eastern states were plunged into a wave of protests that toppled governments, paralyzed economies and even sparked civil wars that sent millions of refugees fleeing the region.

In 2011, when millions of people took to the streets to demand regime changes, the most popular slogan in Egypt was “Bread, freedom and social equality”.

More than 106 million people live in Egypt, more than half in precarious economic conditions. Many cannot afford staple foods, limiting their spending and even restricting their diet, and analysts have warned of riots should the situation deteriorate significantly.

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