Economic Crisis and Social Turmoil: Egypt, the Marriage that Ends in Revolution

Written by Maria de Gregorio (BSc International Relations)

'Poverty is the parent of revolution and crime'

- Aristotle

In what represents perhaps one of the oldest connections between economic hardship and social breakdown, the Greek philosopher Aristotle highlights the way financial instability often leads to frustration, loss of institutions and demands for change. He’s not the only scholar to have drawn this link: Howard Zinn emphasized that history shows mass uprisings often stem from economic injustice; Karl Marx saw economic crises as precursors to class conflict and Barrington Moore linked the rise of authoritarianism to economic conditions, where hardship can lead to either resistance or repression. As Lenin put it, society is only ‘three meals away from chaos’.

This bitter truth mirrors today’s Egypt. In fact, the country has long been the victim of a severe economic crisis, not least because of high external debt, currency devaluations, overreliance on imports and recent external shocks such as the Covid-19 pandemic and conflicts in Ukraine and Gaza. Moreover, Abdel Fattah al-Sisi’s authoritarian regime has tightened its grip on human rights, fueling tension and igniting the first sparks of unrest.

Once the cradle of one of history’s greatest civilisations, this nation now grapples with severe poverty and social turmoil. The grandeur of its ancient golden tombs and awe-inspiring temples stands in stark contrast to the millions of Egyptians struggling to survive. Hungry children wander the streets, begging for scraps, while activists retreat into the shadows, fearing repression. Upon witnessing this grim reality, one question inevitably arises: how did we get here?

Egypt's economic difficulties stretch back decades, but the crisis intensified dramatically in the aftermath of the 2011 Arab Spring and especially towards 2016. Following years of political turmoil, capital flight, and a sharp decline in tourism revenues, in 2016 Egypt secured a $12 billion IMF loan, which ushered in austerity measures, subsidy cuts, and currency devaluation—fueling inflation and deepening financial strain on the population. Although the economy later showed temporary growth, the COVID-19 pandemic (2020) worsened conditions. In fact, the collapse of global travel led to a sharp decline in tourism revenues, a key pillar of the nation’s economy. Moreover, international money transfers, a vital lifeline for many Egyptian households, saw a significant decrease as migrant workers abroad faced widespread job losses and financial instability. Therefore, supply chain disruptions and lockdowns slowed domestic production and increased unemployment. Meanwhile, the government’s stimulus spending and healthcare costs strained public finances, dramatically worsening debt levels. Although recovery efforts began in 2021, deep-seated vulnerabilities remained and were further intensified by the outbreak of the war in Ukraine in 2022.

In fact, being a major wheat importer, Egypt struggled with surging grain prices amid global supply chain disruptions brought by the Ukrainian conflict. In 2023, the country still sourced around 70% of its wheat from Russia and Ukraine, making it highly vulnerable to the ongoing war. In addition, the conflict triggered a 20% spike in bread prices, further driving food inflation and deepening economic hardship for Egyptian citizens. In response, the Egyptian government introduced a series of measures to counter rising food prices, including subsidies for essential goods, diversification of wheat import sources, and tighter management of strategic reserves. However, these interventions have proven to be more costly than beneficial, placing further strain on the national budget and diverting resources from critical sectors like infrastructure and social programs. The soaring cost of wheat has also intensified fiscal pressures, with escalating subsidy expenditures deepening budget deficits. As a result, the government still faces growing financial instability, increasing the likelihood of greater borrowing and ever mounting debt.

Egypt's strategic location exacerbates these challenges, leaving it vulnerable to regional conflicts and trade disruptions. In fact, the Gaza crisis heightened global concerns about regional instability, causing further harm to Egypt’s domestic economy. While tourism accounted for over 24% of GDP, employing over 2.5 million, the perception of insecurity in neighboring countries has deterred international visitors. Indeed, tourist arrivals fell by an estimated 25-30% compared to pre-conflict levels, leading to a significant drop in revenue, which in turn has strained Egypt’s foreign exchange reserves and impacted employment in a sector crucial for both income and economic stability. Moreover, the war in Gaza cut deeply into Egypt’s foreign-exchange revenues, with tolls and transit fees from the Suez Canal declining by 60% in 2024 – a loss of $7 billion. The Suez Canal has long been a major global trading path, generating substantial revenue for Egypt through tolls. However, regional instability has disrupted this traditional shipping route and increased blockages. The heightened security concerns in the region has led to increased insurance premiums for shipping companies, which affected the volume of trade passing through the canal. This reduction in traffic reduced the canal’s revenue 57% in the third quarter of the 2024 financial year, impacting Egypt’s economy, which relies heavily on these revenues for its budget.

Furthermore, investors have been reluctant to meet Egypt’s large external-financing needs, which the International Monetary Fund projected to be around $40 billion for the 2023-24 fiscal year. For now, financial assistance from the IMF, the World Bank, the European Union, the United Arab Emirates, and others appears to have partially pulled the Egyptian economy back from the brink, pledging some US$57 billion in grants and loans from February 2024. Specifically, the new IMF program has produced some successes: Egypt’s exchange-rate system was reformed; inflation, while still elevated at 24% in December 2024, has been slowing; and the debt-to-GDP ratio has fallen, although it remains high at 89% in the 2023-24 fiscal year.

The main reason for this influx of aid has been the international community’s interest in ensuring Egypt’s economic and social stability amid regional conflagrations and geopolitical uncertainties – the country is too strategic to fail.

Some of this support was conditioned on policy reforms such as abandoning the country’s unsustainable fixed-exchange-rate regime and changing subsidy and tax rules. Perhaps most important, the government is obliged to loosen its grip on key parts of the economy. The military, in particular, owns large tracts of land, oversees construction projects, maintains privileged access to finance, and receives tax exemptions. Nonetheless, the downside to this external financial assistance is that it enables Egypt to avoid the deep structural reforms needed to develop a strong, export-oriented private sector.

Moreover, these funds are doing little to help people in a country where nearly two-thirds of the population of over 100 million live in or near poverty, and the social security system provides only small cash transfers to around 21 million people. Reforms undertaken in the context of different IMF programs also unwillingly contributed to an increase in prices and a decrease in the value of cash assistance. Following Egypt’s first IMF loans in 2016, the national poverty rate reached almost 30 percent in 2019 and average consumer inflation reached 33.3 percent in 2024, undermining the right to food and an adequate standard of living. Egyptians faced rolling electricity blackouts this year amid an energy crisis and the government has removed many food and fuel subsidies without sufficient measures to scale up the country’s social security system and mitigate the harm. Its spending levels on social protection, health, and education remain inadequate.

According to the 2025 Human Rights Watch Report, the government’s economic approach, which prioritises spending on large infrastructure projects, especially those led by the military, continues to undermine people's economic and social rights. In fact, these governmental strategies, coupled with the economic hardships result in skyrocketing prices of basic commodities, rising poverty levels and reduced access to food and electricity. Thus, popular discontent is high, owing not only to weaker growth prospects, but also to high inflation, lower food and fuel subsidies, and continued political repression.

Moreover, given the recent toppling of Bashar al-Assad’s dictatorship in Syria, Egyptian authorities have clamped down harder on political expression over fears of a similar uprising. Egyptian authorities have hence embarked on a renewed crackdown on peaceful dissent, through arbitrary detentions and politically-motivated criminal investigations, while preparing to defend the country’s human rights record during the Universal Period Review by the UN on 28 January, according to Amnesty International. In January alone, authorities ramped up their targeting of several critics: a criminal investigation was opened against renowned human rights defender Hossam Bahgat, while prominent opposition politician and publisher Hisham Kassem learned for the first time about a criminal investigation against him, which had been initiated the previous year. Meanwhile, Nada Mogheeth, spouse of detained cartoonist Ashraf Omar, was arrested in connection with an interview she gave with journalist Ahmed Serag, who was himself detained the day before for the same interview. TikToker Mohamed Allam, known as Rivaldo, was also taken into custody over viral videos critical of President Abdel Fattah al-Sisi.

Therefore, Egypt's already fragile economy is struggling to cope with recent global crises, including the COVID-19 pandemic and the wars in Ukraine and Gaza. While international aid mechanisms have been introduced, they have yet to deliver meaningful relief. The road to recovery remains long and uncertain, as these programs continue to face challenges in functioning effectively. In the meantime, it is the Egyptian people who bear the heaviest burden, grappling with worsening living conditions, while the region’s ongoing instability further deepens their hardship. This economic strain is compounded by a growing disillusionment with the government, as many question its ability—and willingness—to implement meaningful reforms and tackle widespread cronyism and corruption. And as the public continues to face daily economic hardships, simmering anger could come to a boil. The Arab Spring may not be over after all.