Egypt’s pound has fallen by 40% since last December, from 6 to the dollar to 8.25 to the dollar on the black market. The prices of basic food items like beans and milk have risen by more than that, pricing all forms of protein out of the range of the half of Egyptians who live on less than $2 a day. And the worst is yet to come: according to the U.S. embassy, the Muslim Brotherhood government has vastly inflated its estimates of this year’s wheat harvest in order to keep export orders down — because it doesn’t have the money to pay for them. Egypt reportedly got $5 billion in emergency loans from Libya and Qatar (although it is not clear how much of that can be spent), but that barely covers the government’s arrears to oil companies operating in the country. I published an update on Egypt’s economic free fall in Asia Times Online this morning.
Mohammed Morsi’s Islamist government is living hand to mouth, stiffing suppliers and exporters, and cadging emergency loans, but it hasn’t ordered a shipload of oil or wheat since January. When things get this bad, everyone who can get dollars out will. The ship is sinking, and the cry is, “Women and children last!”
Here’s an example.
Just after I filed the story, Al Ahram reported that the country’s cotton exports had dropped 40.6% between September-November of 2012 and the same period of 2011 (hat tip: Daniel Pipes). According to the Egyptian daily, the drop is due to much larger domestic purchases of cotton by local textile companies:
Egyptian textile companies bought 415.8 thousand metric quintals of the local cotton in the period September-November 2012, a whopping increase of 326 percent compared with the corresponding quarter a year before.
That makes no sense, because Egyptian textile exports also fell by a big margin.