WATANI International
17 April 2011
Can reconciliation kick-start
It has been a bumpy ride for Egypt since the onset of the revolution on 25 January. Especially significant is that the Egyptian economy has almost ground to a halt. Among the sectors that witnessed near full paralysis are the stock exchange, the construction sector, and the tourism sector which today, some three months after the revolution, has barely gained some 40 per cent of its value of the same period last year. And it does not help that rampant protests and walkouts have crippled production and closed down several factories.
Losses
The outcome of the political turmoil has seen the depletion of Egypt’s resources and foreign currency reserves; the high cost of credit; an inflated bill of imported oil and food stuffs; and high rates of unemployment. Official figures reveal that the Egyptian Pound has lost some 15 per cent of its value against the US dollar, and the stock market has lost close to EGP70 billion.
The Central Authority for Public Mobilisation and Statistics said the losses of the extraction and conversion industrial sector amounted to EGP3.7366 billion. The food industry sector realised the highest percentage of losses whether in product selling price (20 per cent) or in the net added-value (18.2 per cent). According to figures released by the Cabinet’s centre of information and support of decision-making, the communications sector lost USD90 million.
Losses in the construction sector are valued at EGP762.3 million, with 90 per cent idle capacity.
With its pharaonic antiquities and year-round warm beaches, Egypt relies on tourism as its top foreign currency earner, source of over a tenth of gross domestic product and one in eight jobs. With tourist numbers visiting Egypt dwindling to a mere trickle of their original, tourist revenue in February alone witnessed a drop of USD825 million. Employment in the tourism sector fell sharply; contracts with temporary workers were terminated, and salaries of permanent workers were halved.
Revolutionary fever
Economic experts seriously doubt the ability of the Egyptian economy to rebound while security and stability remain missing.
A delegation of the International Money Fund (IMF) paid two successive visits to Egypt, holding talks with Egyptian officials on avoiding a potential economic crisis in Egypt. The delegation is expected to present its report to the IMF and the World Bank.
According to Caroline Atkinson, director of the Foreign Affairs section at the IMF, foreign investors are wary of pouring investments into Egypt, especially in light of the corruption charges levelled at Egyptian investors and at Mubarak and his high-ranking officials who spearheaded the economic reforms.
A report published by the Washington Post said that the revolutionary fever which has gripped Egypt places a thick cloud of doubt over businessmen in general.
Businessmen
Several businessmen who have been accused of wielding their influence or bribing State officials to gain access to State lands at knockdown prices, offered to pay back the sums of money they owe the State in exchange for dropping the charges against them. These lands were used for investment or housing projects. The initiative was poorly received by the public who insisted the businessmen should be penalised and imprisoned. But the governor of the Central Bank of Egypt Farouq al-Uqda told Watani that businessmen indicted on financial not criminal charges would be allowed to schedule the repayment of their debts or fines according to reasonable terms.
For his part, professor of economics at Mansoura University Mukhtar al-Sherif told Watani that the initiative launched by six businessmen to settle the difference in the prices of the lands they have been allocated—differences which amount to some EGP2 billion—is positive and should be taken seriously. It must be remembered, Dr Sherif said, that the main goal is to regain the public money.