CAIRO - The January 25 revolution has radically changing the face of Egypt at various levels. Still, several sectors are in the doldrums. There are big problems with the economy and the tourism sector, but it seems that these are only short-term difficulties; hopefully, a better future lies ahead. The uprising that ousted president Hosni Mubarak and the continued turmoil have temporarily dampened the economic prospects in this populous Arab country. Its appeal as an investment destination has been affected as well. Tourism, a top earner of foreign currencies, has been badly harmed. By the end of this month, it will perhaps have lost as much as $1.5 billion since January 25, according to Minister of Tourism Mounir Fakhry Abdel-Nour. Persistent efforts are being exerted at various levels to support the Egyptian economy; a high-ranking Egyptian delegation recently visited the US, seeking to have debts worth $3.6 billion written off. A similar delegation started this week a tour of the oil-rich Gulf states to try and attract more capital for investments, as well as financial support. A recent seminar, organised by the Army, shed light on the economic situation in Egypt, warning of serious consequences if the economy continues as it is. 'January 25 revolution, Sacrifice, Challenge and Hope' was the title of the symposium, held recently by the Armed Forces Financial Affairs Department and headed by two members of the ruling Supreme Council of the Armed Forces, running the country since Mubarak stepped down on February 11. Three former prime ministers, Abdel-Aziz Hegazi, Ali Lotfi and Kamal el-Ganzouri, attended the symposium, along with several academics and economic experts. Assistant Minister of Defence for Financial Affairs Major-General Mahmoud Nasr started with a briefing about the national economy over the past three months, and the prospects for the coming six months. Nasr said that the deficit has hit 8.5 per cent of the GDP, while the deficit in the State budget is expected to rise by between LE20 billion and LE30 billion, hitting LE130 billion. He added that the total volume of local debt hit 73 per cent of GDP, rising to LE1.026 trillion on June 30, 2010, the end of the FY, noting that it should have not exceeded 60 per cent of GDP. As for inflation, it is expected to rise to 20 per cent by the end of the year, and 14 per cent by the end of the current FY, compared to 10.8 per cent last year. According to General Nasr, unemployment in Egypt at the start of the recent revolution stood at 10 per cent, about 9 million workers from Egypt's total workforce. The rate of poverty stood at 70 per cent, with 6 per cent of the poor termed as 'destitute'. Nasr noted that 16 per cent of the State subsidy found its way to the rich. As for indicators for future prospects, General Nasr said that up to $6 billion of the foreign reserves at the Central Bank of Egypt (CBE) were used in February and March, reducing the reserves to $30 billion. If the reserves continue to be used at the current rate, they will just cover a period of six months, hitting zero by September, which would mean a “very dangerous” situation. According to him, Egypt imports foodstuffs worth $2.5 to $3 billion monthly. Egypt's reserves of food are on the decline; there is enough wheat for four to six months to come, rice for 29 days and sugar for just three months. The country's losses over the past period have hit $1.2 billion monthly, and will rise to $15 billion annually, if things do not change, he warned. General Nasr told the gathering that the flow of foreign investments has come to a complete halt. “Remittances of migrant Egyptians have dropped to $1.5 billion from $4 billion per annum. Several companies have sacked workers. All this has pulled the growth rate down from 5.8 per cent to 3.8 per cent. The figure is most likely to fall to 2 per cent.” Former PM Hegazi spoke next. He said that the estimated 3.8 per cent growth rate was actually 2.5 per cent, adding that people in Egypt should start talking about a “crisis economy”. According to Hegazi, there are topics that need to be urgently addressed, the most important being defining the “identity, or the 'method' of the Egyptian economy”. Former PM Lotfi said that overcoming the state of lawlessness must be given priority, so that the Egyptian economy can continue on the road to recovery. “There is need for an urgent plan to restore security and stability, as well as tourism and investments, that play the most vital role in development,” he said.
