Egypt’s economy will be its biggest challenge during el-Sisi’s third term | Business and Economy News

Abdel Fattah el-Sisi returned as president of Egypt in the election held at the end of 2023, winning a third term with 89.6 percent of the votes in favour of the incumbent.

That el-Sisi was going to secure a victory in the December poll was never really in doubt, according to analysts and Egypt watchers.

Second-place candidate Hazem Omar, of the People’s Republican Party, only managed 4.05 percent of the vote, with the third-place candidate coming in with a similar figure. El-Sisi’s most serious challenger, former Member of Parliament Ahmed al-Tantawy, as well as chair of the Dostour Party, Gameela Ismail, both withdrew after failing to secure the endorsements needed to run.

Ismail withdrew due to what her supporters claimed was a divided opposition, and al-Tantawy because of what he said was the intimidation of his supporters. Egypt’s National Election Authority said al-Tantawy’s accusations were baseless.

“People chose President el-Sisi because of his experience in overcoming security challenges,” political analyst Gamal Abdel-Gawwad subsequently wrote in state-owned newspaper Al Ahram Weekly.

“After all, he was a former minister of defence and head of military intelligence.”

Voter turnout

While victory may have been expected, addressing low voter turnout was a priority for el-Sisi.

In 2014, only 47.5 percent of the population turned out to vote, four years later, only 41.5 percent made it to the polling station, potentially undermining the impact of el-Sisi’s victories.

This year’s final figure of 66 percent, remarkable given the absence of alternatives, did not come about by accident or because people were anxious to make their voices heard about the crushing economic crisis.

While el-Sisi has never aligned himself with a political party, in recent years the Mustaqbal Watan Party has increasingly positioned itself as his closest political ally, using its dramatic 2020 landslide win to demonstrate unflagging support for the president.

Likewise, other pro-regime parties, such as Homeland Defenders Party and the Republican People’s Party appear to have been embraced, being encouraged to wave the flag and get the vote out in the recent poll.

“The election was in some ways a test for whether the now-revamped political machine the regime has been building for years will be able to deliver what the Sisi regime couldn’t deliver in prior electoral contests on its own,” Hesham Sallam of Stanford University said in emailed comments about the increased turnout.

“Since the 2020 [legislative] election, Mustaqbal Watan has been stuck in this ‘political friend-zone’ with Sisi, where he is clearly relying on it as his primary political arm but will still not recognise it as his official ruling party.

“The hope is that this election was an opportunity for the party to prove that it is worthy of this recognition and that it should no longer be just an ‘acting ruling party’,” Sallam wrote, adding that Mustaqbal Watan would always have to comply with el-Sisi’s ambitions and style of rule.

“The regime-allied media went beyond the call of duty in propping up Hazem Omar’s image as a credible challenger and an alternative political voice, which has made observers speculate whether he is being groomed to play a bigger role in the regime’s political theatrics in the coming years,” he said.

Al Jazeera reached out to Hazem Omar on the points raised by Sallam but has received no response by time of publication.

The economy

Electoral achievements notwithstanding, Egypt’s economy remains on life support. While the regime continues to plough on with mega projects, such as constructing a new capital, public debt continues to mount.

Across the country, price rises on subsidised goods have pushed the cost of living beyond the reach of many. The Egyptian pound’s precipitous fall against the dollar has led to increased competition for the hard currency needed to pay for foreign goods and a subsequent shortfall in imports.

“Egypt is currently enduring its most severe economic crisis since the 2011 revolution, characterised by a weak currency, soaring inflation and capital flight, all signs of a deepening debt crisis,” Saif Islam, an associate in Strategic Intelligence with risk consultancy firm S-RM, said in emailed comments.

“These macroeconomic challenges have considerable repercussions for ordinary Egyptians, including increased poverty and unemployment. These socio-economic challenges will likely exacerbate in the coming year, especially in light of the anticipated further devaluation of the Egyptian pound,” he wrote.

New loans, such as the mooted injection of a further $5bn from Saudi Arabia and the United Arab Emirates into the central bank, as well as the potential expansion of the $3bn loan from the International Monetary Fund, were more a reflection of Egypt’s strategic significance – reaffirmed by the outbreak of war in Gaza –  rather than an undertaking on el-Sisi’s part to commit to any fresh policy direction, Islam suggested.

“A significant portion of any new loans will probably be allocated towards servicing Egypt’s substantial debts. The country is obligated to pay $29.2bn in external debt service in 2024, which underscores the critical role of new loans in meeting debt obligations,” he said.

“There was much speculation that Cairo might default on some of their international debt before too long,” Dr HA Hellyer, a nonresident scholar at Carnegie said, referring to the financial strains the country is experiencing, “but few expect that will result in much political change domestically.

“It’s also clear that, for much of the international community, Egypt is deeply important due to its population size and its geopolitical position, especially due to the situation in Gaza and Sudan. No one wants Egypt to fail, on the contrary.”