CAIRO - Egyptian economic experts, who say that the Government must find rapid solutions to the country's economic problems, are divided over whether the future will be better or not. For many years, the economy relied heavily on earnings from tourism, remittances from Egyptians living abroad, oil and Suez Canal revenues, and foreign direct investments (FDIs), but the revolution has changed all that. "It's high time we began focusing on other sources of income like agriculture and industry," said Monal Abdel-Baki, an assistant professor of economics at the AUC, who was among the panellists at a recent AUC media roundtable discussion, one of a series entitled ‘Behind the Headlines – Egypt's Economic Woes: Fact or Fiction'. The current decline in the local economy, including the fall in FDI, foreign reserves and tourism revenues, as well as the budget deficit and other indicators, make one wonder whether the problem can be solved. "In most revolutions, the economy slows down, then struggles till the revolution is successful, followed by restructuring of the economy," added Monal, who is confident that Egypt, within the next ten years, will become another Indonesia, given its natural resources and many employable young people. "We have nine million youngsters aged between 20 and 24, potentially the most important force in the country. We must exploit their potential," she stressed. Monal believes that at least 70 per cent of bank deposits should be used to boost agriculture and manufacturing, rather than paying off debts. Another economic indicator is the Egyptian Stock Exchange (EGX), which, according to Professor Monal, should be strengthened to encourage more investors and ensure that their investments make them profits equal to those from banking investments. One Egyptian pound invested in the EGX must yield as much profit as one Egyptian pound invested in the Egyptian banks, she stressed, adding that, because of the global credit crunch, investments in global stocks are ten times higher than those in the global economy. Prominent economist Galal Amin, a professor emeritus of the AUC, said there are three problems: huge, but old, problems that first appeared in the early seventies; the normal problems one expects after any revolution; and ‘shocking' problems, resulting from poor governmental decisions. "Wrong decisions since last year's revolution have led to a deterioration in the economy. The ruling powers lack the real political will for reform," he noted. “We need the combination of market economy and a powerful will to help Egypt emerge.” Amin said that, although he is a strong believer in social justice, "this is not the right time to call for minimum and maximum wage limits; we need to focus more on encouraging investment”. More pessimistically, Abdel-Aziz Ezz el-Arab, a professor of political economy at the AUC, said during the discussion that the Egyptian economy is in dire straits and something must be done to 'stop the bleeding'. "Everything is ambiguous for the foreign investor, as he isn't entirely surewhat the risks are, because the political scene is unclear," he noted. According to the AUC panellists, Egypt is losing $1.8 billion monthly, while hard currency reserves have plummeted by almost 50 per cent since December 2010. Immediate challenges to Egypt's economy include unemployment, absence of security, lack of transparency, foreign loans and the dire need to restructure Egypt's economic and monetary policies. Egypt's urban consumer inflation climbed to 10.9 per cent in the 12 months to February, up from 8.57 per cent in January, Egypt's State statistics agency said on Saturday. The urban consumer price index for February was 121.1 versus 110.9. During the same discussion, Mohamed Al-Issis, assistant professor of economics at the AUC, stressed that giving dignity to the marginalised classes, developing education and restoring confidence in the economy are key to resolving Egypt's economic problems.
