Egypt’s El-Sisi Orders New Government Formed as Economy in Focus

Tarek El-Tablawy and Abdel Latif Wahba

3 June 2024 at 7:54 am·2-min read

(Bloomberg) -- Egyptian President Abdel-Fattah El-Sisi ordered Prime Minister Mostafa Madbouly to form a new government, as the North African nation pushes ahead with wide-ranging economic reforms after securing more than $50 billion in aid and investments.

Most Read from Bloomberg

The decision, announced by the presidency on Monday, charged Madbouly with selecting a fresh cabinet with “competency and experience.” It said Egypt’s priorities for the coming period, in light of the global challenges, are ensuring national security and developing human capital.

Madbouly was appointed prime minister in 2018 and his cabinet was the longest serving since the 2011 uprising that ousted long-time ruler Hosni Mubarak. The premier submitted the government’s resignation on Monday, and it wasn’t clear when the new appointments would be announced.

A change had been widely expected after El-Sisi was sworn in for a third term earlier this year and authorities gear up for an overhaul of the economy. Egypt, which had been mired in a two-year foreign-currency drought, secured a mammoth $35 billion investment deal with the United Arab Emirates in February, clearing the path for its fourth currency devaluation since early 2022 and an expanded International Monetary Fund program.

Read More: Egypt Unlocks $8 Billion IMF Loan to Ease Crisis With FX Float

Officials have said reforms will now focus on boosting the private sector as an engine of economic growth while trimming spending. Such steps are key to the $8 billion IMF program and seen as vital to restoring investor confidence and developing job opportunities for the nation of over 105 million people.

Even after securing help from the IMF, World Bank, European Union and others, one of the Middle East’s most indebted nations still faces stark challenges. Although inflation has cooled from a record last year, it’s still over 30% and piling pain on consumers.

Read More: Egypt Raises Subsidized Bread Price for First Time in Decades

The IMF is also calling for Egypt to curb the role of the powerful military in the economy and provide the neediest with targeted government support rather than subsidizing key commodities.

Authorities have already made some headway, announcing last week the first hike in the price of subsidized bread in decades. The overwhelming majority of Egyptian households rely on some sort of subsidy.

The last serious attempt at adjusting bread costs triggered riots in 1977 that forced then-President Anwar Sadat to backtrack.

--With assistance from Mirette Magdy.

(Updates with details, context.)