The Economist: Because of the large debts and the scarcity of basic commodities, Egypt and Tunisia are facing difficult economic conditions

The British magazine The Economist

on the suffering of Egypt and Tunisia due to the heavy debts and scarcity of goods, and their governments' attempts to find solutions such as more debt from the International Monetary Fund.

The report said that the scarcity of goods in both countries affected a wide range of them, ranging from tea and cars, through flour, milk, cooking oil, coffee, sugar, butter, clothing and furniture, adding that some shops have even restricted sales of drinking water.

He explained that although the shortage of consumables has occurred in all countries of the world since 2020, the shortage in Egypt and Tunisia was not caused by a defect in the supply chain, but rather by the difficulties facing paying for basic imports.

No ability to import

In Tunisia, the report mentions that President Kais Saied blames what he calls "hoarders, greedy speculators" who refuse to sell at low official prices, but the report says that some goods are not available at all, even on the black market.

Tunisia has $8 billion in foreign reserves (4 months of imports) and $35 billion in debt, mostly to foreign creditors, which leaves little to pay for imports.

The report indicated that shipments are stuck at ports because distributors are unable to pay for them.

The report cites another reason for the exacerbation of the problem in Tunisia, saying that the government sets prices, and this is what compels dairy producers - for example - to sell their milk at 25% less than the cost of production, but the government does not compensate for the difference, and the result was that many left work. Or reduce the number of their herds.

According to the report, Tunisia is going through a more difficult time, and it began official talks with the Fund in July, while the agreement requires cuts in both subsidies and the public sector wage bill, which rose from 11% of GDP in 2010, to 18% in 2020. .

The powerful labor union opposes both measures, arguing that they will increase poverty, while the country currently faces a painful choice: higher prices for subsidized goods, or no goods at all.

Tunisia faces a painful choice: higher prices for subsidized goods, or no goods at all (Reuters)

Egypt has banned some imports

As for Egypt's problems, the report says, they are different.

The Egyptian government is keen to provide its hard currency, so in April it prevented hundreds of companies from importing goods, and the Central Bank imposed its own restrictions on imports, adding that prices have risen since the beginning of the year, as the annual inflation rate for foodstuffs reached 23%. Last month, foreign reserves fell from $41 billion in January to $33 billion, after 4.5 months.

The report stated that these measures helped reduce the Egyptian import bill by 8% last June, compared to the same month last year, despite the rise in oil and wheat prices, and the trade deficit decreased by 12%.

He said that both countries are negotiating with the International Monetary Fund, expecting that Egypt will have to devalue the pound, which has lost 19% of its value since last March.

In August, Egyptian President Abdel Fattah al-Sisi dismissed the central bank governor who had opposed devaluation.

The report added that with a debt ratio of 94% of GDP, Egypt's financing needs are enormous.

It got a $12 billion loan from the International Monetary Fund in 2016, and another $5 billion in 2020. Goldman Sachs estimates it will have to repay $13 billion to the fund over the next three years, and thinks it may need to seek access. $15 billion.