Egypt’s economic situation is critical and the Egyptian government cannot solve these problems alone; all Egyptians must work together to overcome this ordeal, President Abdel Fattah Al-Sisi said in a press conference on Saturday.
He added that the economy is suffering from the consequences of various wars—the Suez Crisis in 1956, the Egyptian-Yemen war from 1962-67, the Six-Day War in 1967, and the October War in 1973—as maintaining economic war policies for such a long period took a great toll on the Egyptian economy overall.
Furthermore, terrorism and corruption have further burdened the already suffering economy, not only in recent years but through the 1990s as well. Every time Egyptian tourism recovers from the impact of terrorism it receives another hit, Al-Sisi added
The most devastating blow for the economy was the “Luxor massacre” in 1997 when 58 tourists were killed. This had a dramatically negative impact on the tourism industry, which sunk even lower following attacks in Sinai between 2005 and 2006.
Al-Sisi added that the 25 January Revolution provided another challenge to the already struggling economy, after adding 900,000 new employees to Egypt’s public sector.
Egypt has huge budget deficits which has lead to more debt. Al-Sisi explained that Egypt has always suffered economic hardships, and that $43bn of the country’s foreign debt was forgiven after Egypt participated in the Gulf War.
He claimed that in the four years following 2011, the salaries increase accounted for EGP 150bn per year—adding EGP 600bn to Egypt’s domestic debt—and that Egypt currently has EGP 2.3tn of domestic debt.
Al-Sisi’s claims contradicted the government’s previous announcements. In the budget for fiscal year (FY) 2011/12, the Ministry of Finance stated that expenditure on wages reached EGP 122bn.
He explained that Egypt must repay the outstanding debts, while decreasing the domestic debt and in order to do so tough economic changes and reforms must take place.
The first real attempt at economic reform was in 1977; however, the then Egyptian government backed down in fear of provoking popular unrest, which had already cost the country a great deal, which Al-Sisi views as a mistake.
Sadat’s government implemented a series of severe measures in 1977, which included the removal of subsidies on basic goods, leading to a public uprising known as the “bread riots”.
In regards to subsidies, Al-Sisi stressed that Egypt is encumbered by tremendous expenses in order to cover these subsides. He gave the example of the EGP 1 metro ticket, claiming that its actual value is more than EGP 10.
The president announced that the government’s efforts and projects to provide a social safety net for those less fortunate, such as the Takaful and Karama programmes for which 500,000 families have registered so far. This is expected to reach 1.5 million families by 2018.
In addition to government plans for social housing, he announced that the completed units will reach the one-million mark by 2018, and in regards to Egypt’s informal settlements problem, 150,000 new units will be available for reallocation by 2018.