Egypt’s rapidly expanding black market for fuel — and for foodstuffs, other commodities and U.S. dollars — may be the most tangible illustration of just how badly the economy of this vast Arab nation is failing, two years after the fall of Hosni Mubarak.
The prices of most basic goods, like fuel and flour, have been fixed for decades, with Egypt pouring roughly a quarter of its GDP into a bloated and deeply inefficient national subsidy system each year.
But after two years of political turmoil, weak governance, a devastated tourism industry and sapped investments, the government is quickly running out of money to foot the bill.
Egyptian economists say the government, confronted with reduced purchasing power, is buying less wheat and diesel from abroad. But they said it is unclear whether that is the main cause of the shortages, or whether the scarcity is driven mostly by the growing black market and the hoarding of goods by ordinary Egyptians who are anxious about the unstable economy.
One way or another, the supply of subsidized goods is drying up, breaking down the long-standing subsidy system and pushing those who can afford it to the black market.
Egypt is in negotiations for a $4.8 billion International Monetary Fund loan that financial experts say would alleviate some of the pressure and improve investor confidence enough to facilitate more badly needed loans and grants from abroad. But those talks have been stalled for months amid a volatile political crisis in Egypt that has delayed implementation of economic reforms needed to complete the deal.
In the meantime, Cairo drivers say they spend up to four hours waiting in line at state-subsidized gas stations that are almost sure to go dry by the afternoon.
“Sometimes they will only sell half of what they have, and then they’ll take the other half and sell it on the black market,” said Rafaat Mahmoud, 53, a taxi driver.
But waiting in line also means losing money in an increasingly desperate economy, so Mahmoud does what many other Egyptians do: He pays 22 percent more to buy the diesel on the black market, without having to queue up.
Before the revolution, there weren’t lines like these, many Egyptians say, viewing the Mubarak-era poverty as a sort of golden age compared with today’s reality.
Many accuse government workers of exploiting the shortages to pad their own pockets. Karim al-Nahas, a hotel worker, described waiting in line for subsidized butane cooking gas, which is officially sold for eight pounds, or $1.17, per canister. But “by the time you get inside the government store, it’s 12 pounds,” he said, because the worker manning the door demands a bribe.