WATANI International
29 May 2011
Difficult, but not impossible
The Supreme Council of the Armed Forces (SCAF) lately warned of the deterioration of economic conditions in Egypt in a phase which it described as critical.
The flow of the direct foreign investment into Egypt is ‘zero’, the SCAF revealed, especially after the attack against the Copts in Imbaba earlier this month. The attack led to cancellations in tourist bookings, and the income from tourism, according to the SCAF member Mahmoud Nasr, fell some 80 per cent. Given that the tourism sector generates 11 per cent of the total GDP in Egypt, the reduction is serious.
Losses, but…
During a recent seminar held by the SCAF under the title “January Revolution and the horizons of economic growth”, and attended by prominent politicians, intellectuals and economists, General Nasr said the Central Bank’s foreign reserve fell to USD28 billion from USD36 billion right after the January Revolution.
Throughout the first three days of the revolution, the Egyptian stock exchange lost EGP113 billion, some 32 per cent of the value of the shares traded and the index fell by some 9 per cent. Last March, the index gained 1.3 per cent.
This rate of economic growth in 2011, General Nasr said, is not expected to exceed one or two per cent, and the unemployment rate has reached 10 per cent.
The Military Council also warned of the rise of poverty in Egypt, the rate of which has risen to some 70 per cent, with 6 per cent of the population destitute. The internal public debt reached EGP88 billion, some 73 per cent of the GDP, while the total public debt—local and foreign—reached some EGP1,080 billion, representing 90 per cent of the GDP.
As a result of the strikes and lost industrial production, Egypt lost between EGP10 to 20 billion on account of the revolution.
Even so, General Nasr said, there is cause for optimism since the economic infrastructure remains intact; no factories, for instance, were ruined or destroyed. He thus described the mission of rebuilding the Egyptian economy as “difficult but not impossible”.
In the aftermath of Imbaba
According to the official figures, the Imbaba attack has cost Egypt EGP6 million in damages. The sum will be needed to restore the church of the Holy Virgin which was burnt down and that of Mar-Mina which sustained serious damage; as well as a large number of shops, houses, and vehicles that were torched and ruined. The State has promised to indemnify the victims, a move which—according to the experts—would cost more than EGP30 million. Another one billion Egyptian Pounds were lost in the exchange stock in the aftermath of the Imbaba attack.
As to the tourism sector, the Imbaba incident had a direct impact on booking in the Red Sea resorts of Hurghada and Sharm al-Sheikh, with cancellations reaching 15 per cent, as reported by Red Sea governor General Magdy Qubiessy.
Tourism Minister Mounir Fakhry Abdel-Nour said that two tourist groups from Germany and Italy who paid a visit to his office after the Imbaba incident expressed serious concern at the tide of events in Egypt which, they said, appeared to brand the country as a terrorist one.
Ilhamy al-Zayat, head of the committee at the Egyptian Union for Tourist Chambers, said that the rival tourist destinations exploited the insecurity of the current critical condition in the country, and diverted large portion of tourist traffic away from Egypt.
Diesel fuel shortage
The diesel fuel shortage, which usually crops up at this time of the year due to increased demand in the agricultural sector, came in promptly like an undesired guest, with long lines of vehicles queuing in front of gas stations.
The industrial sector inevitably felt the pain as the vital transportation movement suffered. As the government allocated funds to import diesel fuel to ride the current crisis, experts promised the shortage would be eased.