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Egypt Still in Dire Straits
Talks are still on-going between the IMF and Egypt over future loans worth up to $4.8 billion to get the country back on its feet. Arab aid from the IMF in the entire region has hit the $10 billion mark in the last year alone. But, if there is not action taken pretty soon, Egypt will fall into uncontrollable depths of inflation and unemployment and see unrest increase in the country.
A joint statement had already been issued at the end of April by Christine Lagarde, the Managing Director of the international Monetary Fund, along with the Governor of the Central Bank of Egypt, Hisham Ramez, the Egyptian Finance Minister, Al-Mursi Hegazy and the Minister of Planning and International Cooperation, Ashraf Al-Araby. It stated: “The authorities are firmly committed to addressing Egypt’s economic and financial challenges with the objective of restoring sustained and socially-balanced growth, and they are already taking encouraging actions in this direction. Work will continue with the objective of reaching agreement on an IMF Stand-By Arrangement to support the authorities’ national economic program in the coming weeks”.
There were five areas that were discussed. Firstly, trade integration. Then, business regulation and reforms of public institutions. The labor market needed redressing as well as access to finance. Lastly, communications must be dealt with.
Growth prospects are estimated at roughly an average of 3% in Egypt for 2013. This is only moderate growth (although a lot better than some of the countries that fund the IMF). Strange, isn’t it, that the IMF is planning on telling the others (as usual) how to run their economies, when their own economies are in disarray? Don’t do as I do, do as I say is always a good method for working practices in management, isn’t it just?
But, the 3% growth expected in Egypt is not going to do very much for those that are unemployed in the country, at the present time. There are just too many of them. Unemployment stood at 13.2% in the first quarter of this year. That’s a huge increase from the pre-Arab Spring figures of about 8.9%. But, we have to ask two questions. First of all, what types of jobs were being dished out by the dictatorship and secondly whether or not that dictatorship faked the figures (as dictators like to do, usually)?
Whatever the case may be, unemployment in Egypt has never been higher than today. The same trend can be seen across the board in all countries that went through the Arab-Spring revolutions. Trade and unemployment have been the top priorities of Egypt for the past two years now. Youth unemployment stands at a staggering 95%. 80% of university graduates are still out of work in the country.
Inflation is also increasing in the country. In April 2013 it amounted to 8.1%. That’s nothing new, however, perhaps some might say. According to the Bank of Egypt, unemployment stood at an average of 8.9% between 1958 and 2013. It even reached a high of 35.1% in 1986. It’s the sector of food and beverages that have increased the most overall. Inflation was one of the reasons behind the ousting of President Mubarak, but it is still not under control today. The Revolution has made way for more discontent in the population of the country. Prices are expected to rise yet again in July as the country will prepare for Ramadan (around July 9th) and that’s when food prices traditionally take a hike upwards yet again in the country.
According to research carried out by the Pew Research center, 70% of Egyptians are now unhappy with the way things are going in their country concerning the economy. Unfortunately 49% of them believe that a strong economy is higher up on the to-do list than democracy. But, is that all that surprising? What’s the first thing we want in life: survival. Once you have the food and water and the shelter and protection covered, people start worrying about democracy. Isn’t that the way we work up the Pyramid of Needs (no pun intended) in life?
Imports are becoming more expensive in the face of rising inflation and scarcities are starting to show through in the market for everyday-Egyptians (such as fuel, for example). Tourism has tapered off considerably in the wake of the uprising and whereas there were 15 million tourists entering the country in 2010 before the revolution, there was a massive drop of a third immediately after and that has stuck since then. It dropped from the world ranking of 75thplace as the most visited country in the world to 85th position last year.
The IMF has lent $10 billion in assistance programs to Arab countries in the last year alone. Let’s hope that the money that will be lent to Egypt will do something to increase the situation of average Egyptians. The discussions over the $4.8 billion that will boost the economy there had better have a beneficial effect. Some might question the ability of the IMF to deal with the problem. Others have seen a marked shift in the way that the IMF is dealing with the problems in the Arab-Spring countries and its questionable way of dealing with the Asian crisis of the 1990s (notably in Egypt by reducing energy subsidies which tended to benefit the rich only).
For the moment, it’s the people that are in dire straits and they are the ones that are in need of immediate help to alleviate their problems.
Originally posted Eqypt Still in Dire Straits
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Naive article written from the perspective of a Westerner. How can one write about the Egyptian economy without addressing the Egyptian gorilla in the closet: population growth and age demographics?
Gezi Park Turkey
http://www.milliyet.tv/nevidyo/video-izle/Gezi-Parki-nin-en-ilginc-eylem...
don't worry, they're working on it. all will be fine.
form churchill:
How dreadful are the curses which Mohammedanism lays on its votaries!
Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia
in a dog, there is this fearful fatalistic apathy. The effects are apparent in many
countries, improvident habits, slovenly systems of agriculture, sluggish methods
of commerce and insecurity of property exist wherever the followers of the
Prophet rule or live. A degraded sensualism deprives this life of its grace and
refinement, the next of its dignity and sanctity. The fact that in Mohammedan
law every woman must belong to some man as his absolute property, either as
a child, a wife, or a concubine, must delay the final extinction of slavery until the
faith of Islam has ceased to be a great power among men
Yep, it really sucks when you run out of oil to export in to pay for your wheat imports...
Egypt will be a failed state within 5 years.... Even if sympathetic OPEC members throw money at the problem....
Egypt should demand higher prices for passing the Suez canal.
However, crazy weather in the USA will cause major heat waves this summer. After that we will see higher wheat prices which will make the Egyptians very angry and hungry.
I'm betting on "Arab Spring 2.0" in Egypt, at the begining of 2014.
Good night Middle East.
IMF - money for nothing and the chicks for free. As if the IMF is a problem solver
The US has to stop meddling behind the scenes. Egypt must not debase their currency. The IMF takes advantage to get countries hooked on their aid.
Did someone say, Dire Straits???
OK....enjoy!
http://www.youtube.com/watch?v=CnE1OAXvelc
How about "Money for Nothng"
http://www.youtube.com/watch?v=iwDDswGsJ60
Beat me to it, and thank you. Prayers for Egypt as well as many others in the region.
My first thought when I saw the headlines was, "No shut!" I mean, here's an overcrowded, undereducated, backward nation. And what did they do? Increase defense spending, scare away tourists, abrogate the peach treaty and install an Islamic regime. If they had tried, they could not have followed a better course of action for destroying the infrastructure, cash flow, economy and tourism. You don't hear too much about all those non-interest Islamic loans anymore (LOL).
This was the post I was preparing to make. Thank you for precisely expressing my oppinion. Add to the list pogroms against the most productive minority (Coptic Christians), causing an increasing number of them to close up shop and look for a better venue for their talents.
Some food for thought...
https://webcache.googleusercontent.com/search?q=cache:SiB7v3oRN64J:http:...
http://hdrstats.undp.org/en/indicators/103006.html
http://shoebat.com/2013/06/01/is-video-implicating-egypts-president-moha...
The real question is... How do you make a silk purse out of a sow's ear?
.
You have got to be kidding. We were actually planning to see the pyramids but when were told that our safety could not be guaranteed. Talk about watching a society in its death throes. Egypt has no jobs, not industry, no cash and no prospects for getting any except debt. Their are run by rural, uneducated, religiously inspired folks who have driven out the Copts, who were the backbone of the economy for decades. Educated young people are fleeing. I seriously doubt that a "visit Egypt" commericial will feven register.
Egypt is a basket case. They don't feed themselves, have little oil, and the country can't turn a trade profit if the tourists are scared away by violence. Egypt's only hope is to conquer neighbors who actually have some oil - like Libya.
The solution for Egypt and all the other Muslim countries that are in dire straits is pretty simple - get your birth rate under control. Unless population growth is less than or equal to real economic growth, unemployment and misery will continue to increase.
That's a pretty grim prognosis Andrew.
How about if they had a "Visit Egypt" year promotion - much the same as Thailand did a few years ago. They could go all out to show their best face to the world and try and ramp up the tourist spend. They need some slick marketing to help the general public forget the images of rioting and bloodshed. That type of bad publicity sticks in the mind a long time unless they actively try to dispell. it.