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News Analysis: Rebuilding Egypt's ailing economy top task for Sisi

English.news.cn   2014-06-05 20:49:23

by Marwa Yahya

CAIRO, June 5 (Xinhua) -- As victory celebrations were reverberating throughout Egypt after former military chief Abdel Fattah al-Sisi was elected president, analysts here worry about the possibility for him to revive an economy hammered by three years of continuous political turmoil.

Sisi will inherit an economy burdened with a high percentage of the population living under the poverty line, along with high illiteracy and unemployment rates, falling investments and declining tourism revenues.

"I do not work out miracles," and "I don't have magic wand," Sisi has said repeatedly during interviews in an attempt to quell the public's high expectations.

Basant Fahmy, a professor of economics at the American University in Cairo, said the new president should focus on quickly addressing the chronic ills of "poverty, ignorance and disease" and push for tangible results.

Tackling these issues is essential, but Fahmy says Egyptians might not be able to wait the time required to see the effects, adding "the people are too impatient to wait for the results."

More than three years have passed since millions of Egyptians took to the streets demanding "bread, freedom and social justice" during a regional uprising in 2011 that ousted former president Hosni Mubarak, whose rule was marred by corruption.

After Egypt's first democratically-elected president Mohamed Morsi was toppled last July in another series of mass protests, most Egyptians now find themselves seeking political and economic stability and relief from the devastating economic downturn.

Fahmy says the unemployment crisis exacerbates the problem.

"Sisi should swiftly work on opening the factories that have been closed since 2011 to absorb Egypt's huge work force," said Fahmy, adding the Egyptian banking system has nearly 200 billion U. S. dollars in cash reserves, which could be used to fund the factories.

Egypt's internal debt is estimated at about 236 billion dollars, with a budget deficit that is 13 percent of gross domestic product. The state spends nearly 30 percent of its budget on costly subsidies for bread and energy. Sisi's platforms indicate he will seek to gradually remove the subsidies after raising private incomes.

Interim Prime Minister Ibrahim Mahlab said that subsidies on oil cost the treasury 22 billion dollars, while just 9.8 billion dollars are spent on education and health services.

The foreign exchange reserve has been reduced by a half since 2011 to 17 billion dollars in April, despite the fact that Egypt has received almost 13 billion dollars in aid from Saudi Arabia, Kuwait and the United Arab Emirates since Islamist Morsi's ouster.

In his congratulatory message to Sisi, Saudi King Abdullah called all supporting states around the globe to hold "a donor conference" to help Egypt overcome its economic crisis.

"The conference will be a strong push for Egypt's economy," Fahmy said, highlighting the success of the Marshall Project, a similar plan launched by the United States to aid the economies of Europe following the aftermath of World War II.

In televised speeches, Sisi has said he intends to develop large areas of the desert in a bid to expand residential areas and cities, with improved road networks and supporting infrastructure.

However, grand projects like this will require the participation of the Gulf countries in developmental projects, not just aid, Fahmy added.

Editor: Xiang Bo
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