Global events have contributed to the devaluation of the Egyptian pound, high inflation, and a lack of foreign currency. Although Egypt had started to recover its tourism industry and economy after COVID-19, the Russian war in Ukraine contributed to a rise in food prices and a lack of forex.
Recently, the Israeli-Hamas crisis has caused a further decline in the tourism industry. Due to the lack of foreign currency, the International Monetary Fund and Egypt agreed to terms on a $3 billion loan program, which may be increased.
In 1979, Fouad Ajami wrote that Egypt finds herself between her “pride and place, between her limited material resources and her unbounded psychological esteem for herself, between her old glory and her current poverty." Forty years later, Egyptians are still immersed in the same contrast, and their struggle to leave poverty is still evident. The economic figures such as GDP coming from Egypt in the last three years raise three questions: 1) Is the Egyptian government on the right track to end its long-standing struggle with poverty, or are the figures nothing but recurrence of the previous wave of economic improvement before 2011? 2) Why are Egyptians unhappy with the recent reforms? and 3) What are the missing policies to make Egyptian society benefit from economic reforms?
Contrast—The Egyptian economy before and after 2011
The
positives of economic reform prior to 2011 were undeniable. However, a thick
wall prevented a great part of the Egyptian society from benefiting from such
reform. Prior to 2011, there were three ways for Egyptians to make their way to
the market and benefit from its growth: to be a local or national leader in the National Democratic Party
(NDP), to be close with the party’s leaders, or to be part of the informal
sector. Some Egyptians chose the NDP way; others have no choice but the
informal market, which eats their money and gives them very little economic and
social benefits.
Five years before the 2011 uprising Egypt witnessed
significant progress in most of its economic indicators. In contrast, the
poverty rate increased from 16.7% in 1999/2000 to 25.2% in 2010/2011.
Moreover, in parallel with the new organized communities that started to grow
in Egyptian cities, slum communities spread all over Egypt. The same scenario
has repeated itself with the current government: in a time of quantifiable
economic improvement, poverty increased to 32% in 2017/18.
Two
factors were behind such distortion in the years before 2011: first, the
political system allowed some Egyptians to have greater access to the market
and to benefit from its reforms than others. Second, the vast majority of
Egyptians earned their living and grew their business in the informal sector, which denied them any social progress.
Comments
The articles above suggest that Egypt’s government and it’s population are lacking common goals after being buffeted by global trends driven by covid and inflation. The pending increase in supply and reduction of oil prices needs to play a part in this planning. Egypt exports crude oil. Egypt’s high population and low labor force participation are their main problems.
Norb Leahy, Dunwoody GA Tea
Party Leader
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