Egypt’s Sisi Sails to New Term With Gaza, Economy in Focus
(Bloomberg) -- Egyptian President Abdel-Fattah El-Sisi was re-elected by a landslide, extending to 2030 his rule over the North African nation that’s mired in its worst economic plight in decades and faces the prospect of another currency devaluation.
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El-Sisi secured 89.6% of ballots in the Dec. 10-12 polls, the National Elections Authority announced Monday. A record 66.8% of the country’s 67.3 million registered voters took part, it said.
A win for the 69-year-old — who brooks scant dissent and faced three little-known challengers — was no surprise, with the only real question being the margin of victory in his bid for a third term. He secured 97% of the vote in two previous elections.
Authorities had focused on encouraging Egyptians to flock to polling stations, keen to allay any signs of apathy in the most populous Arab country where inflation is running at 35% and markets are expecting a brace of potentially painful economic reforms in the weeks or months ahead.
In a televised address after the announcement, El-Sisi said he was “aware of the challenges” Egypt faced, promising to not take any step that wasn’t in the interests of its 105 million-plus people.
Soaring prices and a foreign-exchange crunch were set to be the main backdrop to El-Sisi’s re-election. But the eruption of the Israel-Hamas war on Egypt’s border in October altered the calculus, bolstering the former field marshal’s profile as a global statesman and potentially winning Cairo a fresh infusion of foreign cash.
“He got a stronger than usual mandate, and Gaza has played a big role in rallying Egyptians behind him,” said Riccardo Fabiani, North Africa project director at the Brussels-based Crisis Group. “That will strengthen his hand in future negotiations with international creditors.”
Under El-Sisi, Egypt’s foreign-currency debts have surged to around $165 billion, one of the highest levels in emerging markets. Investors’ concerns about a default have eased in recent weeks, but the country’s bonds are still trading near distressed territory.
El-Sisi first took office in 2014, the year after the military-backed uprising that ousted Islamist president Mohammed Morsi. In both that poll and the next in 2018, he faced token challengers and cruised to victory. Following a 2019 referendum, presidential terms were extended to six years from four.
Re-election offers El-Sisi no respite from Egypt’s grinding crisis. Straightaway he’ll have to balance the concerns of a public that’s paying ever-more for food, electricity and transport after three currency devaluations since early 2022 with calls from the International Monetary Fund to sell more state assets and further loosen the reins on the pound.
Widespread hardship could test El-Sisi. Protesters helped topple his two predecessors, including long-time strongman Hosni Mubarak during the Arab Spring in 2011.
Devaluation Timeline
The IMF, which agreed a $3 billion rescue package for Egypt last year, warned as recently as October that Egypt needed to devalue its pound again. The currency trades at as much as 50 per US dollar on the local black market compared to 30.9 at banks.
The Washington-based lender’s tone shifted this month, with Managing Director Kristalina Georgieva indicating authorities should tame inflation before tackling the pound. That signaled the next adjustment, which many economists expected in the first quarter of 2024, may be somewhat further off.
The IMF is also likely to increase that loan value, mindful of Egypt’s status as a regional linchpin that’s too big to fail as wars rage in neighboring Gaza and Sudan.
While a go-to man for Western leaders trying to stop the Israel-Hamas conflict escalating, El-Sisi has publicly urged Israel to end its offensive on the Palestinian enclave. He’s also rejected suggestions Egypt host Gazan refugees, a step many fear could lead to their permanent displacement while posing a security risk on the Sinai peninsula.
El-Sisi’s re-election campaign highlighted major symbols of his decade-long rule, from thousands of miles of roads and bridges to a Suez Canal expansion and new administrative capital east of Cairo.
He’s repeatedly defended such endeavors, saying they’re crucial to the needs of Egypt’s swelling population. Critics contend they contributed to the debilitating cash crunch.
Egypt’s new regional sway may “allow him to continue as much as possible on the same path of mega-projects and the like,” said the Crisis Group’s Fabiani. “That said, there will still be unpalatable measures that will need to be implemented for this plan to work — the exchange-rate depreciation being the most prominent.”
--With assistance from Mirette Magdy and Abdel Latif Wahba.
(Updates with El-Sisi speech in fifth paragraph.)
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