Egypt’s dire economic situation has Egyptians deeply anxious about their near future
“Bread, freedom, social justice” was the motto raised by the revolutionists in January 2011 when multitudes of Egyptians took to the streets. Among its successes, the revolution counts the toppling of the Mubarak regime but, sadly, it cannot put to its credit that it placed ‘bread’ on the tables of Egypt’s poor. Ironically, bread was in no short supply when the revolution erupted, nor was it even under threat. Today, Egyptians suffer from the short supply of bread and the threat that it will soon become more costly and more scarce.
The question many are asking, however, is: if Mubarak and his regime robbed Egypt and swept its wealth into their pockets, where are the resources that they have not been stealing for the past two years? Why are we now in a situation where prices are spiralling upwards, security is a thing of the past, and bread lines are all over the place? Could a revolution of the hungry erupt if Egyptians no longer find the loaf of bread?
Recent reports issued by the ministries of supply and commerce and industry show that prices of basic commodities have increased during the month of March alone between 15 and 30 per cent. The price increases involve, among others, sunflower oil, margarine, tea, sugar, rice, macaroni, milk, beans and cheese, as well as leap in the price of meat, poultry and fish. Price of both fresh and frozen vegetables nearly doubled.
The information centre affiliated to the Cabinet last March issued a report which indicated that USD22 billion worth of subsidies for the poor were cut from the 2012/2013 State Budget. While the 2012 State Budget included USD135 billion in subsidies, the 2013 State Budget which started last July with the arrival of President Mursi to power included USD113 billion. The decrease adds to the already increasing pressures on Egyptian families since the revolution.
According to the Cabinet report, the income of 57 per cent of Egyptian families does not cover their actual needs; 58 per cent are already trying to reduce their consumption.
Some 90 per cent of the sample taken by the Cabinet’s report confirmed that crime increased following the revolution; 56 per cent believed that the reasons behind the crime were poverty, unemployment and the security breakdown.
A United Nations’ report lists Egypt as 111th in economic terms, placing it among the world’s poorest States. Most of the poor live in Upper Egypt and 3.1 per cent of those living below the poverty line spend USD1 per day. Only 51 per cent of the poor, the report indicates, can occasionally buy meat and fish; 33 per cent are unable to buy fruit and vegetables; 58 per cent have to do with only two meals a day and 61 per cent depend mainly on beans for nutrition.
The economic expert Salah Gouda sees a bleak picture ahead; Egypt is in serious crisis in all respects, he told ++Watani++. There is a grave shortage of foreign currency, and we no longer have enough reserve of the strategic commodities. Worse, he says, there is no plan to face what is to come, in addition to the continuous rise in prices. Instead of presidential claims that Egypt’s economy is as strong as ever, Dr Gouda stresses, the State should acknowledge the problem and attempt to find a solution for it, especially after the governor of the Central Bank, who is in charge of the monetary policy and of providing financial reserve, admitted that there were insufficient funds to buy the necessary commodities during the upcoming period. His declarations contradict the government’s confirmations that the country has enough wheat until the end of June.
Dr Gouda warned that a revolution of the hungry is drawing close, especially if we do not start importing wheat soon. The problem, he says, is that we already import 80 per cent of our nutrition commodities, and it doesn’t help that the persistent drain of the financial reserve can lead to incapacity to pay debts which are due next June. This threatens to bring Egypt to a fate similar to that of Greece.
Dr Gouda also pointed to a serious problem peasant farmers now face: the scarcity of the fuel that they need for the wheat harvest.
The economic expert Mukhtar al-Sharif told ++Watani++ that the main cause of inflation in Egypt was that demand exceeded supply, the result of reduced national product, the flight of capital and foreign investment, and the huge drop in tourism; all of which are the normal outcome of the breakdown in security and the failed political and economic policies.
The budget deficit, according to the latest government report, is nearing EGP150 billion, and economic experts expect it to go up to anywhere between EGP180 billion and EGP200 billion by the end of June. The devaluation of the Egyptian Pound against the US Dollar leads to increases in the prices of imported commodities, leading to increased prices in locally produced similar goods. The decline in the credit rating of Egyptian banks leads to increased bank credit interest, which in its turn translates into higher commodity prices.
The decision to increase taxes for some 100 commodities—which was announced last year but was then denied by the President, only for Egyptians to discover later that it had actually been put into effect—is also contributing to the spiralling prices, according to Dr Sharif. The long waited IMF loan, he says, will be no better than a tranquilliser shot in the arm of the Egyptian economy as long as the production wheel is constantly being halted by unsound political decisions and the rampant lack of security.
When ++Watani++ asked whether Dr Sharif believed that Egypt was on the verge of a revolution of the hungry, he said that this only happened in countries where people could literally die of hunger, which is not the case in Egypt. The problem, he believes, is the anarchy that may prevail owing to the spiralling prices and security breakdown.
21 April 2013