Egypt’s economic crisis has taken a turn for the worse, as a falling currency and government-imposed price caps are now taking a toll on the country’s medicine supplies. Reuters has the story:
Pharmacies across Egypt are running short of medicines, some of them life-savers, as a plunge in the value of the Egyptian pound coupled with strict government price caps has made scores of products unprofitable to produce or import.
The shortages include some cancer treatments as well as basic items like insulin, tetanus shots and contraceptive pills.
Unable to raise prices above levels set by the Health Ministry but now paying roughly twice as much to import drugs or active ingredients, pharmaceutical firms say they have been forced to phase out certain medicine to stay in business. […]
The medicine shortages are piling pressure on the government of general-turned-president Abdel Fattah al-Sisi, who has been at pains to reassure a populace already struggling with double-digit inflation and intermittent shortages that they would be shielded from the worst effects of economic reforms.
The drug shortages are the latest symptom of an ongoing economic crisis in Egypt. As we noted this past month, Egyptians are feeling the pinch amid an economic downturn and a host of tax hikes and subsidy cuts aimed at securing a much-needed IMF loan. In the short term, the damage has been exacerbated by the government’s decision to let the Egyptian currency float freely. That was a necessary condition to receive the $12 billion IMF loan, but it has caused the Egyptian pound to plummet in value overnight. Before November 3, the currency was pegged at 8.8 pounds to the dollar; today, its value has halved and currently stands at 17.5 pounds to the dollar.
These are not merely routine economic troubles. Many Egyptians who have grown reliant on food subsidies to feed their families can hardly scrape by under the new conditions; now, life-saving drugs are out of reach for many. On a macro level, Egypt’s tourism industry and foreign investment have dried up amid concerns about terrorism, while Cairo’s erstwhile benefactor Saudi Arabia has abruptly cut off fuel exports. Given this dire state of affairs, popular discontent with the government of President Abdel Fattah al-Sisi is rising.
None of this is good news for U.S. interests. A breakdown in the Egyptian social order would be a disaster for an already fractured Middle East. Many of the economic reforms Cairo is undertaking are painful but necessary, promising long-term gain in exchange for short-term pain. At the moment, however, many Egyptians cannot see the light at the end of the tunnel. The next U.S. administration needs to keep its eye on Egypt to make sure that Cairo remains a stable partner. In the meantime, the Sisi government would do well to take measures addressing its current policies’ most dire side effects.