IMF continued to pressure Cairo to privatise state assets and allow flexibility in its currency; govt stiffened entry requirements for Sudanese refugees.

Divergence persisted between Egypt and IMF on economic reform program. International Monetary Fund (IMF) 11 June confirmed that review of Egypt’s economic reform program did not take place in March as initially planned due to slow pace of reforms and, as a result, second tranche of $3bn loan package was not disbursed. Central Bank of Egypt same day said annual inflation rate in May rose to 32.7%, from 30.6% in April, highlighting that prices have not yet declined since January devaluation. President Sisi 14 June signalled refusal to let Egyptian pound float and allow for further devaluation, citing impact on livelihoods. National dialogue proceeded with meetings three days a week.

Egyptian border guard shot three Israeli soldiers dead. Egyptian border guard 3 June entered Israel through Nitzana border crossing and fatally attacked three Israeli soldiers; assailant’s family denied allegations of religious radicalisation, but acknowledged his resentment toward Israel after Israeli forces reportedly killed one of his colleagues. Israel subsequently gave its soldiers authorisation to shoot at any suspicious Egyptian soldier; incident unlikely to undermine bilateral security cooperation, however.

Egypt, Türkiye moved forward with normalisation of relations. FM Sameh Shoukry 3 June travelled to Türkiye to attend Turkish President Erdoğan’s inauguration ceremony, days after Egyptian presidency announced that Sisi and Erdoğan had agreed to immediately exchange ambassadors as part of diplomatic relations upgrade.

Cairo stiffened entry requirements for Sudanese. As thousands of people fleeing fighting in Sudan remained stranded at Sudan-Egypt border with no valid travel documents, Cairo 10 June required all Sudanese to obtain electronic visas to enter Egypt, reversing longstanding visa exemption for women, children and elderly men.

Scepticism persisted about Cairo’s ability to make economic reforms and avoid default, while national dialogue kicked off amid harassment of regime critics.

Cairo made limited progress on asset sales. After long stalemate, govt from late April made limited progress in selling state-owned assets, key step in securing foreign revenues and meeting external debt liabilities. Notably, finance ministry 14 May announced sale of 9.5% stake of state-owned Telecom Egypt, which raised around $120mn; how much went to foreign investors remained unclear. Meanwhile, rating agency Fitch 5 May downgraded Egypt’s long-term foreign-currency issuer default rating from B+ to B. Finance Minister Mohamed Maait 9-10 May addressed parliament on 2023-2024 draft budget, which allocates 56% of total spending to debt servicing and anticipates that new borrowing will represent 49% of total revenues, suggesting that Cairo expects to meet almost all of its current foreign liabilities through borrowing.

National dialogue kicked off amid opposition mistrust. National dialogue between govt and opposition representatives 14 May began after months-long preparations. Some opposition parties, including Socialist Popular Alliance Party, boycotted dialogue, citing authorities’ failure to meet preconditions, particularly release of political prisoners. Meanwhile, crackdown on dissent continued. Notably, prominent critic of President Sisi, Ahmed Tantawi, who fled country in 2022, delayed return planned for 6 May after authorities 5 May detained several of his relatives and supporters on terrorism-related charges; Tantawi 11 May eventually arrived in Egypt after release of two family members, vowed to run for president in 2024.

Conflict in Sudan led to border chaos. Thousands of people fleeing conflict in Sudan in May reportedly remained stranded for days at Sudan-Egypt border. Sisi 27 May said Egypt has received 150,000 Sudanese citizens since 15 April.

Economic crisis remained major threat to country’s stability; conflict in neighbouring Sudan fuelled fears of regional destabilisation.

Doubts persisted about Cairo’s commitment to reform programme. Ahead of first review of country’s $3bn rescue package, International Monetary Fund in April continued to pressure Cairo to privatise certain state assets and allow flexibility in Egyptian pound to help absorb external shocks and rebuild foreign currency reserves. Authorities in April did not announce any new sales of govt-owned assets to Gulf investors that could ease foreign currency and funding crisis. Amid rampant inflation, foreign investors also complained about central bank’s hesitant monetary policy, calling for steeper interest rate hikes.

Long-awaited national dialogue set to begin in May. Authorities late March-early April said National Dialogue, which was first called by President Sisi in April 2022, will kick off 3 May. Representatives of human rights groups set to participate in dialogue 9 April met with National Dialogue General Coordinator Diaa Rashwan, urged authorities to open civic space; attendees also called for extension of 12 April deadline for NGOs to regularise their status under 2019 NGO law, which govt next day rejected.

Detention of soldiers in Sudan sparked rumours of Cairo’s involvement in conflict. As conflict broke out in neighbouring Sudan (see Sudan), paramilitary Rapid Support Forces (RSF) 15 April captured group of Egyptian soldiers in Merowe town, located between capital Khartoum and Egyptian border. Sisi, who has close ties with Gen. Abdel Fattah al-Burhan’s army, 17 April denied any involvement in Sudanese conflict, saying Egyptian soldiers were on Sudanese soil to carry out military drills with their Sudanese counterparts. The Wall Street Journal 19 April however alleged Cairo had sent warplanes and pilots to back Sudanese military. RSF around 20 April allowed Egyptian soldiers to return home. Govt 27 April said 16,000 people had crossed into Egypt since fighting broke out; thousands more people reportedly stranded late April at Sudan-Egypt border with little humanitarian assistance.

Economic tensions built up again, security outlook in Sinai Peninsula continued to improve, and govt took new steps toward reconciliation with Türkiye.

Inflation climbed to record highs and pressure on exchange rate increased. President Sisi 2 March announced package of measures, including state wage and pension raises to help alleviate economic pressures, which could spark tensions especially as Muslim holy month of Ramadan started 23 March. Central Bank 30 March raised key interest rates by 2% in attempt to curb rocketing inflation, as annual inflation rose to 31.9% in Feb, highest in five years, with food prices rising most steeply. Value of Egyptian pound relative to U.S. dollar in March continued to decline on black market while official exchange rate remained stable at EGP30 to $1, possibly indicating that Central Bank has gone back to managing value of pound despite International Monetary Fund’s request that it switch to flexible exchange rate.

Human rights situation remained dire, lull in violence continued in Sinai Peninsula. Special Court (Emergency State Security Court) 5 March sentenced 31 members of NGO Egyptian Coordination for Rights and Freedoms to lengthy prison terms on terrorism-related charges. UN Human Rights Chief Volker Türk 7 March expressed “fair trial concerns”. NGO Human Rights Watch 13 March said crackdown on opposition extends beyond Egypt’s borders, alleging authorities systematically refuse to provide or renew identity documents to dissidents, journalists and activists abroad. Amid few incidents in Sinai Peninsula, army unit and Islamic State-affiliated Sinai Province militants 7 March exchanged fire near al-Tur town, South Sinai, wounding one soldier.

Progress continued toward reconciliation with Türkiye. FM Sameh Shoukry 18 March met with Turkish counterpart Mevlüt Çavuşoğlu in capital Cairo, marking new phase in gradual reconciliation between Egypt and Türkiye; Shoukry and Çavuşoğlu said relations would be normalised “at the appropriate time”, and announced President Sisi and Turkish President Erdoğan would meet after Turkish elections in May.

Economic situation remained fragile, security continued to improve in Sinai Peninsula, and tensions emerged between Cairo and Riyadh.

Economy stabilised temporarily, but vulnerabilities persisted. After exchange rate devaluation last month, overall economic situation in Feb stabilised with foreign investors resuming purchase of govt treasury bills, and exchange rate remaining steady at around 30 Egyptian pounds to $1. Country remained vulnerable to shocks, however. Central Bank 2 Feb kept interest rate unchanged at 16.75%, surprising most economists and drawing criticism from foreign investors. Ratings agency Moody’s 7 Feb downgraded Egypt’s credit score from B2 to B3, pushing bonds further into junk status, expressed concern about social and political impact of adjustment.

Jihadist activity reached new low in Sinai Peninsula. Tribal sources in Sinai 9 Feb reportedly informed military that locals have noticed movements of Islamic State (ISIS)-affiliated Sinai Province operatives in mountainous areas of central Sinai Peninsula. Army in following days began searching for ISIS elements. Improvised explosive device around 14 Feb wounded 12-year-old girl on outskirts of Sheikh Zuweid town in North Sinai.

Relations with Saudi Arabia deteriorated, top diplomat travelled to Türkiye. Amid tensions over delayed handover of Egypt’s Red Sea islands of Tiran and Sanafir to Saudi Arabia, several Saudi Arabian commentators and journalists late Jan-early Feb criticised Egypt’s profligate fiscal practices and inefficient economy marked by army interference with business (see Saudi Arabia). Comments came after Saudi Finance Minister Mohamed al-Jadaan in Jan announced Riyadh would change financial aid policy and require reforms in exchange for money, in likely reference to Egypt. In response, Egyptian journalist Abdel Razek Tawfiq 1 Feb lashed out at Riyadh’s perceived arrogance on Cairo24 and al-Gomhuria websites. President Sisi 9 Feb however attempted to mend ties with Riyadh, calling on Egyptians to remember support received from their “brothers”. In following days, Cairo24 and al-Gomhuria websites removed Tawfiq’s article. In first visits by top Egyptian diplomat in a decade, FM Sameh Shoukry 27 Feb travelled to Türkiye and Syria to show solidarity after devastating earthquake.

President Sisi continued to push for national dialogue and praised security gains in North Sinai in apparent bid to deflect pressure as economic crisis deepened.

Economy entered unchartered territory as Egyptian pound hit record lows. After govt committed to moving toward flexible exchange rate to secure $3bn loan from International Monetary Fund in Dec, exchange rate from 4 Jan began nosediving from its previous level of EGP24 to $1, temporarily hitting EGP32 to $1 on 11 Jan and subsequently stabilising around EGP30 to $1. Central Bank 16 Jan said adjustment had succeeded in restoring trust, with foreign investors transferring nearly $1bn into Egypt’s foreign exchange market following devaluation. Fitch Ratings agency 18 Jan said move “should have a positive influence” on Egypt’s credit profile but warned that “large external financing needs and related policy adjustments still represent important risks”. Govt in Jan also ordered ministries to cut spending for next six months, though health, interior, foreign affairs and defence ministries were exempted.

President Sisi-sponsored national dialogue initiative remained stalled. National dialogue Sec Gen Mahmoud Fawzi 16 Jan said official start of dialogue would be announced shortly. Opposition Civil Democratic Movement 20 Jan again urged authorities to release more political prisoners, allow political parties to operate freely, and lift restrictions on media to prepare “suitable climate” for national dialogue. U.S. Sec State Antony Blinken 30 Jan met with Sisi in capital Cairo, discussed human rights situation among other topics.

High-level officials highlight security gains in Sinai Peninsula. PM Mustafa Madbouly and Army Chief of Staff Lt. Gen. Osama Askar 14-15 Jan made rare visits to North Sinai, said security situation is stable and state institutions fully functional, and paid tribute to soldiers’ efforts against Islamic State-affiliated Sinai Province. Sisi 23 Jan said Egypt “succeeded to a great extent to eliminate terrorism in Sinai”.

Preparations for national dialogue among country’s political forces dragged on, jihadists launched rare attack west of Suez Canal in mainland Egypt, and govt secured IMF rescue package.

President Sisi-sponsored national dialogue initiative remained stalled. No date in sight for official launch of national dialogue among political forces more than eight months after Sisi announced initiative in April. Opposition Civil Democratic Movement 3 Dec conditioned participation in dialogue to release of 1,074 political prisoners.

Police suffered rare Sinai Province attack in mainland Egypt. Security forces early Dec reinforced checkpoints along Suez Canal, conducting night patrols and reconnaissance flights in area to prevent attacks by Islamic State-affiliated Sinai Province (SP). SP militants 30 Dec however attacked police checkpoint in Ismailia city, located on west bank of Suez Canal in mainland Egypt, killing at least three police officers.

Cairo secured external support amid financial crisis. International Monetary Fund 16 Dec approved 46-month $3bn bailout package, while govt 23 Dec announced World Bank approved $500mn support for social protection programs. Meanwhile, Cairo continued to diversify partnerships. Sisi 8 Dec attended China-Arab summit in Saudi Arabia’s capital Riyadh, met with Chinese President Xi Jinping and Saudi Crown Prince Mohammed bin Salman. Reports in following days emerged of Saudi Arabia’s sovereign wealth fund eyeing $600mn purchase of Egypt’s state-owned United Bank and of China preparing $500mn in financing for Egypt. Sisi 13 Dec attended U.S.-Africa Leaders Summit in U.S. capital, Washington DC, met with U.S. Sec State Antony Blinken.

Widespread repression came under scrutiny during Egypt-hosted UN climate change conference (COP27); Islamist militants in Sinai Peninsula demonstrated resilience.

Security forces arrested scores ahead of planned protests during COP27. Authorities early Nov resorted to mass arrests and security forces deployment amid online calls to organise anti-govt protests on 11 Nov – to coincide with COP27 held 6-18 Nov in Sharm el-Sheikh city. Notably, NGO Human Rights Watch 16 Nov recorded 700 people detained 1 Oct-14 Nov across 18 governorates, denounced “nationwide crackdown”. As COP27 kicked off, imprisoned blogger and activist Alaa Abd el-Fattah 6 Nov stopped drinking water for about ten days in addition to his six-month-long hunger strike, drawing international attention to his plight; at least three other political detainees died in Egyptian prisons during COP27. European Parliament 23 Nov passed resolution calling for thorough review of European Union’s relations with Egypt in light of poor human rights record.

Media report alleged cracks in security apparatus. Paris-based media outlet Africa Intelligence early Nov reported that six intelligence officers 23 Oct resigned after failing to convince intelligence chief Abbas Kamel to address widespread popular frustration over economic hardship; incident, if confirmed, would highlight existence of major disagreements within security establishment.

Islamist militants proved resilient in Sinai Peninsula. Amid ongoing counter-insurgency operations by govt forces and allied tribal militiamen, Islamic State-affiliated Sinai Province (SP) militants 18-19 Nov exchanged fire with govt forces and took over several govt buildings in Al-Qantara city near Suez Canal; air force fighter jets fired missiles at school where militants had barricaded themselves, reportedly killing them; at least one army officer and five soldiers also killed.

In other important developments. On sidelines of football World Cup opening ceremony in Qatar, President al-Sisi 20 Nov for first time shook hands with Turkish President Erdoğan, who few days later reaffirmed intent to pursue full normalisation of diplomatic relations with Cairo.

Authorities faced increasing domestic and international pressure to improve human rights record as country hosts UN climate conference; jihadist activity persisted in Sinai Peninsula.

Pressure built up on govt to improve human rights record. Ahead of annual UN Climate Change Conference (COP27) to take place in Sharm el-Sheikh city 6-18 Nov, UN experts 7 Oct said govt is creating “climate of fear” to dissuade civil society organisations to engage visibly at COP27. Local civil society coalition COP Civic Space 19 Oct said thousands still detained without legal basis, and NGO Amnesty International next day denounced “cruel and inhuman conditions” for opponents and civil society activists still in jail. As preparations for Sisi-sponsored national dialogue dragged on, authorities 11 Oct announced imminent liberation of 70 detainees held in pretrial detention for political issues; 16 Oct announced release of another 25 detainees.

Economic problems fed into political discontent. Amid economic crisis, govt 1 Oct increased cost of eight subsidised staple goods, including cheese, cooking oil and lentils. International Monetary Fund and govt late Oct reached preliminary agreement for $3bn loan conditioned on series of economic reforms. Calls for anti-govt protests to be held 11 Nov – to coincide with COP27 – mid-Oct started circulating online. In response, authorities in following days increased patrolling and erected checkpoints in capital Cairo and other cities, reportedly searching mobile phones for anti-govt content.

Govt forces and allies continued to combat jihadists in Sinai Peninsula. Parliament around 3 Oct extended state of emergency in North Sinai by another six months. Sinai Tribal Union and govt forces 3-5 Oct reportedly killed 11 Islamic State (ISIS)-affiliated Sinai Province (SP) militants in Jilbana area, about 20km east of Suez Canal. Exchanges of fire between SP elements on one hand and army and tribal fighters on the other reported 5, 14,16 Oct in Rafah area, with fatalities on both sides. Suspected SP militants 20 Oct killed two tribal fighters south of Bir al-Abd town and in Jilbana area.

National dialogue set to begin in Oct as govt faced sustained pressure to free political detainees; military and tribal militias continued to confront jihadists in Sinai Peninsula.

Poor human rights record cast shadow on upcoming national dialogue. President Sisi-sponsored dialogue set to start in early Oct after board of trustees 11 Sept announced selection of rapporteurs for dialogue’s three main tracks. Status of political detainees remained sore point. Coalition of opposition parties participating in dialogue Civil Democratic Movement, 7 Sept urged govt to speed up release of prisoners of conscience. Public prosecutor 14 Sept released 46 prisoners, including political activist Haitham Mohamedin and Al Jazeera journalist Ahmed al-Najdi; authorities 17 Sept rearrested civil society activist Sherif el-Ruby, less than two weeks after his release from prison. Meanwhile, group of MPs and other members of ruling party 1 Sept filed lawsuits against independent media outlet Mada Masr journalists after they published article alleging financial violations within party. U.S. 14 Sept announced withholding $130mn – of $300mn conditioned on human rights benchmarks – in military aid to Egypt for second year in a row.

Islamic State (ISIS) affiliate suffered severe blow in North Sinai. Armed forces and Sinai Tribal Union combatants 3 Sept killed at least ten ISIS-affiliated Sinai province (SP) operatives and detained four others in counter-insurgency operations in Jilbana area (north-western Sinai) east of Suez Canal. SP suffered one of most severe blows in recent years when army and tribal fighters 11 Sept killed SP commander Ahmad Suleiman Odeh, alias Al-Shayeb, and his deputy Yunis Salim Salem al-Qaram, alias Abu Osama, at unspecified location in North Sinai. Suspected SP operatives 19 Sept killed prominent Sinai Tribal Union commander, Hamid al-Wat, at or near his home in North Sinai.

Sisi sought external support amid economic crisis. Sisi 13-14 Sept made first visit to Qatar since bilateral relations resumed in 2021; Sisi and Qatar’s Emir, Sheikh Tamim bin Hamad al-Thani, signed agreements to boost cooperation. Move appears to be part of Egypt’s efforts to find new investments and foreign support to secure International Monetary Fund loan.