CAIRO, September 2, 2013 —The ghost of the economic crisis continues to haunt Egyptians.
In Egypt, there are 5 sources of income. These are the Suez Canal, tourism, crude oil, agricultural products, industry and the savings of the Egyptians working abroad.
Political unrest in the form of endless protests, turmoil, violence and terrorism had terribly damaged the economy of the country, and that damage has escalated since the June 30 protests.
Political stability and the rule of law are corner stones for economic growth. In 2013, tourism dropped by nearly 70% and exports have dropped by nearly 50%.
Moreover, the unemployment rate is alarming, with youth unemployment at 13.2%. The new generation of workers does not contribute to pension schemes and has no access to social security. According to Dr. G. Barssoum an Associate Professor at the American University of Cairo, “the economic frustrations of a new generation pose a serious threat to Egypt democratic transition.” This makes it critical for the government to re-consider the unemployment of young people who often voice their anger and frustration in terms of violent demonstrations.
The interim government is challenged by the fact that one third of the budget of Egypt goes to subsidizing goods such as gasoline, electricity and some basic food items such as bread, sugar, rice and cooking oil. While the subsidies dent government budgets, at least 80% of the population depends on these subsidies to survive.
Following the June 30 removal of President Mohamed Morsi, many Gulf countries like Saudi Arabia, Kuwait and UAE pledged a total of $12billion to bolster Egypt’s foreign currency reserves. A bank account was created by and for Egyptian citizens with the aim to compensate for the balance deficit and lack of funding.
In a press conference last week , Minister Ashraf El Araby said that the interim government adopted an economic plan to maintain social justice and create new job opportunities. Meanwhile, Hazem El Beblawy, the interim Prime Minister, tasked the country’s economic ministers with preparing a new economic road map.
Obviously, Egypt is going through hard times and it’s only through efforts of policy makers and people’s support that stability might be achieved.
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