The economic and social crisis in Egypt… why?
Flux of direct foreign investments regressed to zero and it put Egypt at the degree of danger in what concerns credit classification.
Egypt looses every day about 40 million $ in tourism sector whose income regressed for 80 %. This is due to regression of tourism reservations to 20 % due to events of Imbaba. Foreign currency reserve regressed from 36 to 28 billion $ during the revolution of 25 January 2011. Budget deficit rose to 1290 billion Egyptian pounds. This indicates that growth rate is 1 – 2 %.
Poverty rate reaches up to 70 %, among which 6 % are very poor. Public local and foreign debts reached up to 1080 billion Egyptian pounds, representing 90 % of the total local product.
Losses of industrial sectors varied between 10 – 20 billion Egyptian pounds due to stopping of most of industries during the last period.
Unemployment reached up to 10 %. Actually, this rate is more than 25 %.
Losses of the Egyptian stock market in 25, 26 and 27 January 2011 reached up to 112 billion Egyptian pounds.
Analysis of the social and political context
And its impact on the economic situation in Egypt
· Falsifying the will of people.
· Spread of corruption.
· Deficiency of democracy practice and flattery.
· Weakness of parties.
· Interference of businessmen in politic.
· Social disequilibrium represented by classes that achieved rapid wealth.
· Trouble of social values and regression of the role of the family and schools.
· Deterioration of the relation between police and citizens.
· Deficiency of media and cultural means.
The economy… sectors facing the unknown
The Egyptian economy, on the level of all its sectors, passes through a real crisis that threatens it, and with it the country. This is clearly shown by statements of officials on its bad situation.
Economic sectors, starting from tourism, and industry, suffer of a regression on the level of growth. They face problems and enormous losses, we try to survey through opinions of experts and official data.
The ten sins of the ancient regime:
- Neglecting education and training, the Egyptian worker became the less competent worldwide.
- Not taking into consideration gradual taxes that created cases of great fraud.
- Neglecting agricultural sector that destroyed our ability to provide our needs of food products.
- Lack of clear policy to attract investments that did not exceed the total product.
- Constant budget deficit that increased from 1 % in 1977 to 8 % in 2010.
- Failing to achieve any steps to fight against poverty, till it reached 20 %.
- Neglecting revising salaries, which led to wide differences between basic and total salary.
- Fixation of foreign debts at 34 billion $, which means reaching danger border.
- Increasing internal debt, till it reached 100 % of the total local product.
- Decreasing average individual income in comparison with life costs concerning middle and poor classes.
Numbers & statistics:
- 7 % decrease of national product during the 1st quarter of 2011.
- 6 billion $ decrease of foreign currency in the central bank.
- 12.4 % inflation last April, according to the report of mobilization and statistic authority.
- 221.3 billion L.E. importations of Egypt from July 2010 to February 2011.
- 3 billion $ regression of investments.
- 9.4 % unemployment rate in Egypt last year.
How to get out of the crisis:
- Reducing financial gap by credits from international institutions.
- Political stability and establishing a constitution ensuring economic factors.
- Radical solutions for categories needs and eliminating salaries gap.
- Increasing taxes by increasing actual tariffs.
Magdy Garas
May 2011
