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These gas lines have become all too familiar in Cairo. Cash and fuel shortages are raising questions about Egypt’s ability to keep importing wheat that is essential to subsidized bread supplies.

Tara Todras-Whitehill • New York Times ,

Short of money, Egypt faces food and fuel crisis

  • Article by: DAVID D. KIRKPATRICK
  • New York Times
  • March 30, 2013 - 5:16 PM

 

– A fuel shortage has helped send food prices soaring. Electricity is blacking out even before the summer. And gas-line gunfights have killed at least five people and wounded dozens over the past two weeks.

The root of the crisis, economists say, is that Egypt is running out of the hard currency it needs for fuel imports.

The shortage is raising questions about Egypt’s ability to keep importing wheat that is essential to subsidized bread supplies, stirring fears of an economic catastrophe at a time when the government is already struggling to quell violent ­protests by its political rivals.

Farmers already lack fuel for the pumps that irrigate their fields, and they fear they will not have enough for the tractors to reap their wheat next month before it rots in the fields.

U.S. officials are warning of disaster unless Egypt soon carries out a package of tax increases and subsidy cuts tied to a $4.8 billion loan from the International Monetary Fund. That would convince other lenders that Egypt is ­creditworthy enough to obtain billions more in additional loans needed to meet its yawning deficit.

But fearful of a public reaction at a time when the streets are already near boiling, the government of President Mohammed Morsi has so far resisted an IMF deal, insisting that Egypt can wait.

Those who say Egypt cannot afford enough fuel are “trying to make problems for Morsi and his party,” said Naser el-Farash, the spokesman for the Ministry of Supply and Internal Trade and a fellow member of the Muslim Brotherhood’s political arm.

Farash placed blame for the fuel shortage on corruption left over from the government of Hosni Mubarak, combined with hoarding inspired by fear-mongering in the private news media. “They are against the revolution,” he said.

Independent analysts say that the growing shortage of fuel and the fear about wheat imports now pose the gravest threats to Egypt’s fragile ­stability.

“It has the potential to make things very, very bad,” said ­Yasser el-Shimy, an analyst for the International Crisis Group.

Egypt has held two years of unsuccessful talks with the IMF, and the government is still balking at the politically painful package of overhauls — even as rising prices and unemployment make those measures more difficult with each passing day. The two years of mayhem have decimated tourism and foreign investment, crippling the economy. The government’s reserve of hard currency has fallen to about $13 billion from $36 billion two years ago.

Diesel fuel is the crux of the crisis, in part because Egypt relies entirely on imports. ­Diesel is also essential to much of the economy. Not only do farmers use it to power machinery for irrigation and harvesting, diesel truck fuel contributes to the price of nearly everything shipped.

Farash, of the supply ministry, insisted that Egypt is still importing just as much fuel as it did three years ago before the revolution. Diesel now sells on the thriving black market for more than twice the official, subsidized price. But Ali Mehrous al-Dairy, the patriarch of a farming family, said that fuel is now hard to come by even on the black market.

He said, “By God, I don’t know what we are going to do.”

© 2014 Star Tribune