On 29 July, Egyptian Prime Minister Mostafa Madbouly made a bold claim, “Just as prices rose in previous periods due to the challenges we faced, they must now decline,” adding that banks are meeting importers’ foreign-currency needs and that the “recent economic crisis” is over.
The pound is indeed steadier, and headline inflation has cooled. But steadier is not the same as fixed, and growth is not the same as development.
However, in recent years, Egypt has cycled through versions of these claims by the government before, because the point isn’t whether the pound is 20 piasters stronger or weaker this week; it’s whether the policy mix is still widening an extraction model and calling it growth.
A claim that outruns the lived economy
The official case hangs on more available foreign currency reserves, a somewhat firmer pound, and promised price cuts. But households live inside slower, stickier structures; administered energy prices, transport costs, rents, and fees. Annual urban inflation eased to 13.9 percent in July, down from 14.9 percent in June. That’s welcome, but it follows years of cumulative hikes that continue to bleed through bills.
The ongoing claims about anticipated price declines are sharply contradicted by the reality of rising household electricity bills, for example. Shortly after the Prime Minister's remarks, state-aligned media revealed government plans for electricity price increases slated for September 2025, driven by the high costs of imported fuel and a monthly burden on the power sector that amounts to approximately EGP 25 billion. This situation reveals a pattern of government reliance on raising household bills and employing regressive taxation as a misguided strategy to tackle its fiscal problems. The rhetoric surrounding "price cuts" is nothing more than political theatre, deliberately obscuring the reality that there has been no substantial economic improvement for everyday citizens.
An economy that funds itself by selling future income while under-investing today will keep circling the same drain.
A parallel signal undercuts Mostafa Madbouly’s “the crisis is over” narrative. Recent data shows Egyptians are increasingly buying property in Dubai. This rise in property purchases, noted to hit record levels (+150%) in 2025, connects directly to currency instability and the desire to protect investments. While the government pressures local businesses to reduce prices, wealthy individuals are seeking safer places for their money. If everyday people are facing economic struggles, while the rich are finding ways to safeguard their wealth abroad, you’ve socialized the pain and privatized the insurance.
Pillars of the current wave of rent extraction
Rent extraction is simply a pattern of policies that prioritize raising cash or shifting assets through privileges, securitization, and tax privileges, rather than building productive capacity that raises future income. Although the Egyptian regime has constantly resorted to rent extraction in the past few years, the new architecture revolves around a mixture of policies and anticipated deals that all move value out of the public, productive base and into contractually protected streams.
First, the government is moving to “maximize returns” from so-called underused state assets along the Nile Corniche by clearing riverfront property. This is not abstract urbanism; it signals a planned wave of future evictions aimed at preparing these corridors for private redevelopment. This represents a classic conversion of public land and location value into immediate fiscal relief and long-term concessions. Political scientist Hossam el-Hamalawy aptly described the situation as “an emblem of an extractive, austere capitalism that prioritizes elite profit over the commons,” or extraction by dispossession.
Another plan involves transforming airports into long-term revenue contracts that span multiple decades. Earlier this year, the Ministry of Civilian Aviation hired the International Finance Corporation to structure public-private partnerships across 11 airports, with Hurghada International Airport leading the way; ownership stays with the state, but operating rights, commercial development, and fee income are handed to operators under long-term agreements. The Egyptian government seems to be already courting potential suitors, having held talks with South Korea’s Incheon International Airport Corporation, Turkey’s TAV Airports, Dutch operators Royal Schiphol Group, France’s Groupe ADP, and Italy’s ADR Group about operating Egyptian airports and Cairo Airport development. The plan aims to permit private entities to generate revenue from air travel and related services, presenting it as a form of progress. The government's benefits from such long-term concessions will hinge on several factors, including revenue sharing, pricing controls, investment commitments, and contract termination clauses, which have yet to be publicly discussed.
Third, sovereign sukuk—Islamic bonds—backed by state land revenues, push the treasury toward securitization as a habit, not an exception. A presidential decree allocated roughly 41,500 feddans of land along the coast of the Red Sea to the Finance Ministry explicitly to reduce public debt via sukuk. Officials stress that the land itself is not “sold.” True. But it is used as collateral, and future income is pledged to investors, and experts warn the maneuver can shrink headline debt through accounting while leaving the public on the hook for periodic distributions and principal. In a swift move, Egypt raised 1 billion USD via a three-year sukuk fully bought by Kuwait Finance House.
The fourth, and perhaps one of the most consequential pillars of rent extraction schemes by the government, is the tuning of the tax code to protect privileged cash flows. In mid-June 2025, Parliament approved a protocol to the Egypt–UAE tax treaty that designates ADQ (Abu Dhabi’s sovereign wealth fund) as a “government institution,” granting exemptions on dividends, capital gains, and interest, including profits from bonds and sukuk. That is a deliberate shielding of income earned through specific vehicles and concessions from Egypt’s tax base. Meanwhile, independent analysis by the Egyptian Initiative for Personal Rights of the 2025/26 state budget allocation shows education at 1.54% of GDP and health at 1.2%, well below constitutional benchmarks and at decade-low shares. Choosing treaty-level tax shields for favored counterparties while letting core social spending sink as a share of the economy is not a technocratic necessity; it is by nature a political choice to privilege rent streams over capability-building.
Moreover, seaports. One might argue that seaport concessions bring know-how and traffic. Sometimes they do. The issue is the terms and where the value lands over 15 to 50 years. Abu Dhabi Ports Group’s push along the Red Sea is illustrative. The company signed 15-year concessions to operate cruise terminals and multipurpose ports at Safaga, Ain Sokhna, Hurghada, Sharm El-Sheikh, plus a logistics and industrial zone east of Port Said. Layer that with the treaty-based tax exemptions noted above for ADQ-linked income, and you have a policy stack that can tilt value capture away from the public purse for a generation.
Growth ≠ Development
Here’s the gist. Even if GDP growth edges up this year, it tells us little about broad-based welfare. Development is the durable ability to produce, export, and earn decent incomes, not the ability to mortgage assets and raise household bills. If fixed investment keeps undershooting, then “growth” merely tracks rent collection, not productive upgrading.
On that question, the data is direct. Political economist Amr Adly notes that gross fixed capital formation (GFCF)—the national measure of investment in plants, equipment, and structures—has dropped to its lowest share of GDP since 1980, with the private sector’s share falling to just 5% of GDP in 2024. Across 2014–2024, total GFCF averaged 15.65% of GDP, far below peer economies. Simply put, Egypt is reinvesting too little to materially raise productivity or wages.
A firmer pound and smoother import financing help inventories and raise sentiment for a quarter or two. But the structural drivers that matter for development are not moving in tandem. That combination leads to temporary growth spurts without any improvements in capability.
So, what?!
The Egyptian government may claim the crisis is over. But an economy that funds itself by selling future income while under-investing today will keep circling the same drain. As things stand, short-term stabilization is achievable; development does not seem to be.
So sure, Prime Minister Mostafa Madbouly’s call for prices to fall is politically appealing. The economy it sits on is not. The state’s finance engine is still land monetization, long concessions with tax-privileged counterparties, and securitized revenue streams anchored in national assets. Inflation has cooled on paper, but core costs that shape daily life are heading higher. Elites are protecting their assets abroad. Domestic investment remains too thin to carry development.
To clarify, in today’s economy, there is nothing fundamentally or uniquely wrong with making concessions or even engaging in selective asset sales to the private sector. The main issues are sequence and reciprocity. There is often little information available regarding contract tenders, clear reinvestment obligations, and revenue-sharing mechanisms that ensure fiscal benefits are preserved.
When “recovery” is built around income streams detached from productivity (rents), the system becomes very good at redistributing value upward and very bad at generating it. Even if GDP ticks up on the back of one-off deals, that’s not development. Development shows up as sustained gross fixed capital formation, higher export complexity, and jobs with rising productivity, wages, and labor protections.
On those measures, Egypt remains stuck, and that is what a functioning extraction model looks like for a rentier state. And until the policy mix shifts from rents to capability development, it’s the same song and dance.
At the time of publishing, the official exchange rate was about EGP 48.53 per USD.
This is a bit over my head but I wonder how most Egyptions can even eke out enough to live on. I hope this isn't the future of the US economy under our new fascist government. It sure sounds rigged!