SCOTT SIMON, HOST:
This is WEEKEND EDITION from NPR News. I'm Scott Simon. The Egyptian military's been deployed to the streets of Port Said today. Riots erupted in that city last night just northeast of Cairo after a controversial court verdict. At least 25 people have been reported dead. The violence comes amid mass street protests in Egypt against the ruling Muslim Brotherhood.
It is a challenging time for the Egyptian government. The country's grappling with serious budget deficit in order to secure a $4.8 billion loan from the International Monetary Fund. This will likely mean both spending cuts and tax hikes on food, water and electricity, and many Egyptians are feeling the pinch of economic turmoil and rising prices. Merrit Kennedy reports from Cairo.
MERRIT KENNEDY, BYLINE: Food security was a key demand of the Egyptian revolution, but two years on many say it's getting more difficult to feed their families. At a crowded open-air market in the poor neighborhood of Imbeba, vendor Mona el-Sayed is selling bread, wheat and pasta displayed on the top of a wooden crate. She says that she and her five children can barely get by.
MONA EL-SAYED: (Foreign language spoken)
KENNEDY: May God protect the people. A sack of flour now costs 30 pounds more. There's an increase in everything. We can't even live.
In downtown Cairo, Sobhy Ibrahim owns a small shop selling milk and cream. He's been working here for 15 years and he says these are the worst times he's ever seen. He says the price of a gallon of milk has almost doubled since the revolution and the cost of electricity and his rent have also risen.
SOBHY IBRAHIM: (Through Translator) So with all of these increases, increases, what have you left for me to eat? How can I live? I will raise prices for the customers and then the customers won't buy anything.
KENNEDY: Ibrahim's shop is inside a covered 100 year old market just two blocks from Tahrir Square, the epicenter of the revolution. Cycles of violence in the streets nearby have deterred customers and dairy prices are set to go up an additional 15 percent because the value of the Egyptian pound has slipped, according to the state media.
Ali Abdel Fattah, from the ruling Muslim Brotherhood, says the increases were initiated by privately owned companies. Economist Ibrahim al-Essawy, from the Institute of National Planning, says that these price increases are a result of disequilibrium in the economy. Like many of Egypt's economic issues, this predates the revolution.
IBRAHIM AL-ESSAWY, ECONOMIST: The Egyptian economy is in a very difficult situation right now. The problems are not new. They are inherited from the past regime but they were worsened in the last two years.
KENNEDY: The government is trying to put together an economic plan in coordination with the IMF to address Egypt's large fiscal and balance of payment deficits. Last month, amid mass protests against the government, the prime minister announced a sweeping set of tax increases on an array of goods and services, along with new income taxes.
But later that same night, the president's office revoked the tax hikes after widespread criticism. The details of the latest plan haven't been announced yet. Austerity measures and tax increases will be difficult politically for President Mohamed Morsi at a time when many Egyptians, like housewife Samia Mohammed, are losing trust in the government.
SAMIA MOHAMMED: (Through Translator) They keep telling us that life is good, life is rosy, we have money. Every time the president comes out to say this to us, he turned out to be a liar.
KENNEDY: Economic Ibrahim al-Essawy thinks the government will delay any new austerity measures, fearing political backlash.
ECONOMIST: ...like dealing with the subsidy problem, which might cause some prices to rise, while at the same time the government is not able to compensate the low-income people for such increases in prices. So it is a dilemma, really, for the government.
KENNEDY: He says the most important question is whether the government can accomplish the delicate balancing act of getting the budget under control without making life even more difficult for Egypt's poor. For NPR News, I'm Merrit Kennedy in Cairo. Transcript provided by NPR, Copyright NPR.