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Egypt’s economic measures bear fruit

With an eye on the the future, the government is investing heavily in infrastructure and has shunned populist measures to tide over adverse circumstances

Gulf News

President Abdul Fattah Al Sissi is arguably the first Egyptian president with an eye firmly focused on his nation’s long-term economic health. He is motivated largely by a burgeoning population projected to increase by as much as 20 per cent in 2020 and unlike many of his predecessors he eschews short term feel-good fixes.

With the future uppermost in mind, the government is investing heavily in infrastructure such as highways, airports, power stations, desalination plants, fisheries and agricultural projects as well as two news cities — a smart green city in Aswan, an eco-city in Alamein — besides the mega new administrative capital currently under construction.

Moreover, Al Sissi has made great strides in fulfilling Egypt’s energy requirements for decades to come. The dark days under Mohammad Mursi’s tenure when there were hours-long electricity outages, kilometres-long queues for petrol and a shortage of cooking gas are long gone. The giant offshore Zohr gas field — the largest in the Mediterranean — began operating in December and will ensure the country’s self-sufficiency in gas by next year. This month, British Petroleum began producing gas from the Atoll field just 33 months after it was discovered. A projected excess for domestic requirements bolstered by renewable energy and nuclear plants to be constructed at Al Dabaa on the north coast will allow for exports turning the country into an important regional energy hub.

With memories of the 1977 bread riots resulting from subsidy cuts, President Al Sissi should be credited for taking hard but courageous measures he knew would force Egyptians to tighten their belts when he could have courted personal popularity by maintaining the crippling subsidies that have long drained Egypt’s fiscal coffers.

He could have refused the IMF’s demand to float the pound which resulted in a greatly devalued currency and overnight price surges if his interest rested solely with being reelected by a massive margin. He is only too aware that sectors of the society are struggling but has assured the people there is light at the end of the tunnel and has instituted safety nets for the poorest. He has also vowed to rehouse slum dwellers.

“We are at a bottleneck on the way out [of the financial crisis] and if we want to get out, we must take tough measures; we have to endure them and be patient,” was his message last autumn. And, indeed, the consensus is that the president’s policies are paying-off big time.

For instance, Egypt’s foreign reserves standing at $38.2 billion have reached record highs surpassing the pre- 2011 revolution of $36 billion, one indicator of economic recovery. Inflation is hurtling downwards from its high of 35 per cent in July 2017 and is expected to hover around the 13 per cent mark by the end of this year. Easing inflation propelled the Central Bank to cut interest rates by 100 basis points last week. Egypt is also benefitting from a rebounding tourism sector, a narrowing trade deficit, increased foreign investment and higher remittances from Egyptians living abroad.

The unemployment rate is slipping southwards although at just over 11 per cent has a long way to go before it reaches the government’s desired four per cent by 2030 especially given that each year approximately 700,000 school leavers and graduates enter the job market.

Most crucially, the country is paying its debts. Both Fitch and Standard and Poor’s have stamped Egypt’s economic outlook as “positive”. Moody’s has predicted growth of 5 per cent by 2019.

“In four years he [Al Sissi] has delivered stability to a nation [Egypt] staggering under the economic and social upheavals wrought by the so-called Arab Spring.”
-Linda S. Heard
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The IMF has praised Egypt for carrying out bold but necessary reforms and sees a “broad based” recovery in progress. Likewise, the president of the World Bank Jim Yong Kim has acknowledged the nation’s economic trajectory is on the right track.

Unfortunately, the western media consistently fails to give the president recognition for his achievements. Newspapers such as the New York Times, the Washington Post and the Guardian ignore the fact that he risked his life to heed the cries of tens of millions of Egyptians who rejected life under the Muslim Brotherhood. And in just four years he has delivered stability to a nation staggering under the economic and social upheavals wrought by the so-called Arab Spring whose aftermath ravaged so many of Egypt’s neighbours.

Whereas almost the entire country is as secure as France, Belgium, Germany and the UK, parts of northern Sinai and the Western Desert are still being cleansed of Brotherhood-linked militants and terrorists affiliated to Daesh [the self-proclaimed Islamic State of Iraq and the Levant].

Ten days ago, a major military campaign by air, land and sea was launched to root out homegrown and foreign enemies. Hundreds of terrorist hideouts, weapons caches and vehicles have been destroyed as well as convoys of infiltrators entering from Libya.

The problem with the government’s foreign critics is that they fail to grasp the mess this country was in a few years ago and where it is today. From my perspective as someone based in Alexandria, the transformation is little short of miraculous.

Egypt needed a strong hand to guide it out of the morass and President Al Sissi’s was the one outstretched.

Linda S. Heard is an award-winning British political columnist and guest television commentator with a focus on the Middle East.

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