Six years ago today, tens of thousands of Egyptians descended on downtown Cairo’s Tahrir Square demanding “bread, freedom, and social justice.” Only 18 days later, the protests ended President Hosni Mubarak’s three-decade reign. Any ensuing optimism about the Arab Spring was short-lived, however, and by virtually every standard, the problems that generated the uprising are even greater today. The current Egyptian government’s repression of its opponents is broader and more brutal, youth unemployment is higher, the economy is in dismal shape, and there is a growing sense that the country is adrift. Yet despite this mounting frustration, President Abdel Fattah al-Sisi is “very confident,” one senior official told me. “He has a good relationship with people and knows that the people trust him,” the official told me.
Sisi is confident because of the relative quiet that followed the Central Bank’s decision in early November to float Egypt’s currency, which cut the value of the Egyptian pound in half and catalyzed steep price increases. Some Egyptian officials warned against this move, fearing that it could spark mass protests akin to the two-day January 1977 “Bread Riots,” which shook President Anwar Sadat’s regime after he cut food subsidies. But Sisi had little choice. By autumn of 2016, falling cash reserves led to major commodity shortages, and the government felt that it had no choice but to act. “It was either business as usual and focus on [Sisi’s] popularity,” said the official, “or look at the future and put the country on the right track while dealing with the consequences.”
To be sure, the currency devaluation, which was immediately followed by another round of energy subsidy cuts and the signing of a $12 billion IMF loan ($2.75 billion of which Egypt received immediately), improved Egypt’s macroeconomic outlook. The black market for currency quickly dried up, and inflows of currency to the central bank immediately spiked. Foreign cash reserves increased from $19 billion at the end of October to over $24 billion two months