Analysts: Economic recovery presents challenge for new Egyptian president

2012-07-11 By Waleed Abu al-Khair in Cairo

Egypt is trying to regain Saudi investment capital to spur economic development. Above, Egyptian President Mohamed Morsi meets with Saudi ambassador to Egypt Ahmed al-Qattan. [Handout/Reuters]

After Mohamed Morsi was declared the winner of Egypt's presidential elections, public attention turned again to the country's economic situation, which economists and analysts said they view as one of the most important issues facing the new president.

"The Egyptian economy, like other economies of the world, cannot be detached from the political and security variables and influences at play within the borders of the Republic of Egypt, nor regional and global geopolitical influences," said Dr. Saad Abdul Ghaffar, a professor of economics at Cairo University.

"The political map of the region has changed, and the Egyptian economy was greatly affected in the process as internal events coincided with external ones," he told Al-Shorfa. "Since conditions in the region have not yet stabilised, the new president and his economic team must give serious consideration to the economic situation in order to draw the country out of its current economic bottleneck."

Abdul Ghaffar said that Egypt's present economic malaise must be addressed alongside the country's "political and social issues", adding that "the socioeconomic situation was a key cause of the revolution".

"Political stability will thus come through the socioeconomic gateway," he said.

Rekindling regional relations

In his first foreign trip as head of state, Morsi arrived in Saudi Arabia -- which has billions of dollars of investments in Egypt -- on Wednesday (July 11th), at the invitation of King Abdullah bin Abdulaziz.

The visit's aim is to strengthen relations between the two neighbours, according to the official Middle East News Agency (MENA).

Abdul Ghaffar said Egypt must witness "political openness with the Gulf States" during the upcoming months in order to stimulate the country's lagging economy.

He told Al-Shorfa he expects Egyptian officials to embark soon on a regional tour in order to restore trust and clear the way for new investments to start pumping into Egyptian markets.

Egyptian businessmen, meanwhile, said they are anticipating new legislation and revised regulatory structures that may encourage greater economic development and Saudi investment.

"The Egyptian-Arab business community awaits new economic legislation and amendments to existing laws to suit the new state of affairs," said Rauf Muhammad Ali, a businessman and member of the Egyptian Industrialists Society.

The business community also expects "many restrictions to be lifted," he told Al-Shorfa, "especially those related to safe market exit and financial distress cases, as well as the removal of obstacles that previously hindered foreign investors, and the resolution of [legal] cases involving Saudi investors so the confidence of Saudi capital is restored and encouraged to re-enter Egypt."

A number of Saudi investors in Egypt, whose estimated $27 billion worth of investments are primarily concentrated in the tourism, industry and real estate sectors, expressed hope that President Morsi will address stalled Saudi investment projects, Saudi Arabia's Okaz reported in June.

Improving the internal investment climate

As the country's security situation gradually improves, Egyptian merchants and industrialists have begun working on improving the internal investment climate, Ali said.

He called for accelerating national reconciliation and curbing protests, or at least delaying them for a few months, in order "to improve Egypt's image, because the persistence [of protests] creates an unfavourable impression of the investment [climate] in Egypt."

"The trend in the next period will tend towards tapping [the economic potential of] all provinces and utilising their geographical locations and natural wealth, which will have the double benefit of creating employment opportunities in the provinces and providing a source of liquidity for the state treasury," he said.

Mobilising investment initiatives

According to Mustafa Aziz, an economic advisor and researcher at the studies centre of the Ministry of Industry and Foreign Trade, President Morsi knew prior to his election that the road ahead for Egypt's economy would be trying.

"[Morsi] expects the results of remedial efforts to start emerging in the coming months," Aziz said.

He added that economic recovery will not come "through wage and salary increases, but [rather] through economic and investment packages that were developed in advance and will be unveiled in succession".

He said a group of businessmen will be relied on to mobilise the private sector.

"The focus will primarily be on Egyptian businessmen, followed by Arab and foreign businessmen. Partial solutions exacerbate the economic situation, so the result will be impressive if the investment plan is implemented with precision and through a process that is free from political pressure," he told Al-Shorfa.

Aziz said that "loans and agreements at this stage will be of the [rescue loan] variety, and negotiations with the International Monetary Fund for a $2.3 billion loan are moving in the right direction".

In addition, Saudi Arabia has already partially fulfilled previously-pledged financial commitments, with the Saudi-based Islamic Development Bank giving $1 billion to finance energy and food imports, Aziz said.

"These amounts are an initial drizzle [of money] and will be used to bridge the projected $38 billion budget deficit, raise the value of the Egyptian pound and bolster foreign currency reserves, which had fallen to $15.5 billion, down from $36 billion in 2011," he said.

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READER COMMENTS

عبدالكافي

2012-8-27

In the beginning, I congratulate the people of Egypt for their reconciliation in their choice of their government and I pray to Allah that He does not disappoint them in that Egyptian government. Therefore, I wish that the new Egyptian Government would make every effort to provide a decent life for its people and seek to achieve their demands in terms of education, housing, unemployment, the environment, and also to seek to improve its economy in general.
مقداد كامل

2012-8-27

We wish for the new government success and reconciliation in realizing the hopes, dreams and the demands of the Egyptian people who endured tough conditions in which the bounties of the country have been stolen by a ruling gang led by the offender Mubarak who stole the country, made it poor and destroyed their resources. Therefore, the new government faces major challenges, most notably the counter-revolution and the remnants of the gang who are deployed in all the institutions and the parts of the country so the State institutions must be cleansed of corruption and corruptors in order to be dedicated to the achievement of the many demands of the people from education to housing, health, reforming the economy, developing the State, and improving the services. We are waiting for the new government to do a lot of things because Egypt deserved to return to its international position in the world as the most important country in the Middle East and the world. We must restore the history of Egypt again and achieve the renaissance.
ازهر

2012-8-27

After the success of the Egyptian Government after a long struggle with the election, I would like to congratulate her and the Egyptian people on the rule of someone from them who can achieve their demands. Also, I wish that the Egyptian Government will succeed and will not let down its people which make me ask the government to make all its efforts to achieve all the demands of its people, especially regarding some necessities such as trying to improve the educational level because it is a means by which we can develop the country. In addition, I call on the government to solve the problem of unemployment, which is threatening every Egyptian family by launching some projects that will accommodate the largest number of the young people, and that it works on reforming the agricultural lands that its return vary from the youth employment to the provision of the agricultural crop which contributes to lowering the prices from one hand and it is possible to export the surplus to other countries on the other hand which will help the entering of the foreign currency to the country. As I hope, I ask her to seek in solving the housing problem radically, particularly the slums, as it is one of the most important problems that most of the Egyptian families are facing and the youth too. Eventually, I pray for the Egyptian Government’s success and achievement of all the people’s demands and that they will not let them down.
سلمان

2012-8-24

The current and future situation of the Egyptian economy, the relationship of the environmental economy with the life quality, the operational agricultural projects and their role in promoting the Egyptian national economy system, the non-conventional methods for the advancement of Economics of the Egyptian Agriculture, the important role played by the agricultural economy for the national economy and the big trend to provide a large part of the strategic crops which are imported from abroad will all be influential, strong and very significant factors in promoting the agricultural economy. They may also contribute to a significant proportion of the national economy. The great positive steps that are currently taken represented in the supply of millions of tons of wheat to the Ministry of agriculture and the trend to the cultivation of a very large part of the territory of the Nubariya with oil crops are all positive steps to the right direction for the promotion of the national economy.
ذكرى عبد المنعم

2012-8-15

The Egyptian elections which have recently taken place have been one of the fairest elections although they comprise some negative things which have not affected the conduct of elections. The latter have been one of the new elections which the entire world has witnessed their success and fairness. In fact, the Egyptian elections have taken place in an atmosphere of optimism and looking forward to a bright future for which all the sons of Egypt are looking. Indeed, we could witness problems in the elections in a lot of developed countries which have made quantum leaps of democratic practices. The elections can also be subjected to criticism from the part of voters themselves for their opposition to the results which are delivered after the counting of votes. Yet, we have not noticed such things in the Egyptian elections.
حمدي جاسم

2012-8-9

There is no doubt that the Islamic religion is the main source of legislation and rule in the Great State of Egypt. Indeed, the people protested in streets and sacrificed their lives to defend their religion. It is obvious that the Egyptian people would not allow the Armed Forces to alter any article of the Constitution. The fact that the people demonstrated in streets to demand freedom and eliminate injustice in the twenty fifth of January, proves that they are quite ready to sacrifice their lives for the sake of their religion and their homeland, the Great Egypt. On the other hand, there is no relationship between religion and tourism. They are distinct aspects of life. Indeed, there is no link between them. They are not contradictory at all. The worst thing that could happen is to live in a country where people deny the existence of God. In this country people do not believe in God and in religion. In fact, atheism leads to negligence. However, the Islamic religion might unite and strengthen the links between Man and God. Islam guides people to the straight path, enlightens the believers and provides them with all their needs. This is the true nature of the Islamic religion. Otherwise, the people would live in total ignorance and forever in darkness. For this reason, the mosque and the other places of worship should regain their past position in the community. They must keep disseminating their holy message. We must call on and insist on the reform of the religious discourse in mosques and other place of worship. In the coming period, we should achieve these objectives through the appropriate and sound connection between the constant values and variables in the Islamic State.
ابراهيم كمال

2012-8-7

Even the present President himself suffered from too many unjustified detentions on the grounds that he is part of an organization that represents a risk to the national security which is the Muslim Brotherhood Party, which has never worked to overthrow the governing regime. However, all those accusations, which were addressed to him for the failure of the brothers, have many constraints that could confront the President Mohammad Mursy, but he can make Egypt go beyond all of those obstacles safely. The new President must choose a government that fears Allah in all the matters that they will do and to fear Allah in treating the people of Egypt, the people that suffered from the lack of achieving any of their requirement. However, the situation of Egypt was worsening day after day because of the corruption that had been prevalent within all the sectors starting from the first staff to the previous President. The corruption was rampant in all sectors under the former President and the citizens would be suffering severely. The epidemics have abounded and the diseases were spread because of the existence. There is also the spread of the carcinogenic pesticides which infect the vegetables with a lot of damage and infect everyone who eats it, not to mention the other corruption cases that were represented in the government, and the other concerned agencies that were working for their own benefit and were not interested in the personal interest of the citizens.
ابو سهى

2012-8-3

I do not know why I have a lot of great feeling about Egypt's future after the new president, despite the fact that the facts on the ground predict many battles waiting for him. The former regime men do not down their arms yet and we do not know when they will cut off the flow of the money river or from where it comes, and we do know when the paid media will stop unprovoked attacks on the stop president, and we do not know when the lurking forces will stop at the analysis of every breath of the new President and the activation timing and Military Council stands holding its powers based on forces beyond the new president's control, where the Interior Ministry men are betting on security restoration and the economy issue and business remains where many of them loyal to the former regime which they collected the money in and want to continue the same way of working.
موسى

2012-8-1

The Egyptian people have suffered from injustice and persecution which pushed them to revolt against the former regime. The economic conditions are devastated, the employment opportunities are unavailable and the education is very bad. Even regarding the health situation, the Egyptian citizens did not get their rights to have access to it.
jumah

2012-7-28

The political future of Egypt holds many equal opportunities for all the people of Egypt, whether it be their opportunity to take part in the legislative or presidential elections, which are like guarantees and procedures that large segments of the noble people of Egypt have been demanding for years, and at the forefront of which is an end to the state of emergency that has the country has been under, and enabling the impartial Egyptian judiciary to completely oversee in a direct manner the electoral process itself, and oversight on the elections by civil society organizations both local and international, and allowing for equal opportunities in the media for all the candidates, especially in the presidential elections, and enabling Egyptians living abroad to exercise their right to vote through the Egyptian embassies and consulates.
فردوس

2012-7-28

There is no doubt that Egypt is currently at a very difficult juncture, and we hope that Egypt will make it to safety as the current circumstances are very difficult, and the political situation is very difficult as well, and the economic and security situations are very bad, and the social situation is very bad too, and everything is in total disarray, and we hope after having made it through the electoral process that took place and which was a success, and after the first president taking office in a transparent as well as a considerably democratic manner, that this will be the first step toward safety, and with the presence of Dr. Mohammed Morsi we will see Egypt become very advanced, as he is a great leader governing this country. So, many Allah protect you, Mr. President!
حميد عبدالله

2012-7-28

This is an age that passed and now we have a new age like the empty sheet which is waiting for its writer to impress the world with his skills and potentials. The former regime left nothing in our beloved Egypt except ashes and remains of destruction. It left nothing in us except broken souls and injured hearts due to the unemployment and the years that were lost like a mirage. Nothing will be beautiful and impressive in a blink of an eye because it is impossible. However, God does not waste the reward of the good doers. Therefore, we have to re-arrange our issues and put the proper plans for our current situation, plans which would enable us to reform what was ruined. The plans have to be designed upon good educational foundations with regard to all fields because, in fact, all fields in our beloved country need restoration. It is alright if we need to import the necessary experience and professional experts so that we may learn the required skills in rebuilding our beloved Egypt. Re-development of the self and methods of life is not a shame or fault, but the blind imitation is the biggest fault. First, the president of the country has to appoint trustworthy ministers. They have to be individuals who honestly love this country to a great degree and sincerely seek to achieve goodness for Egypt.
قحطان عباس نعمان

2012-7-28

A lot of countries seek the help of Egypt in many major projects. This is a blessing that we should thank God for, the blessing of having skills which are not available in other countries. We have to get the help of scientists and engineers in order to decrease the electric cutoffs happening constantly in the power stations. Spare parts of good quality have to be used to bear the increasing consumption even if it means having to pay a lot of money in these parts, yet this will save the money spent on fixing the old parts. I hope to see the comprehensive development in all the electric sectors all over Egypt. I hope that the electricity services would enter each house in Egypt and Egyptians would not have to suffer from the recurrent electricity failures which represent a huge problem to the Egyptians. The Egyptian Government is facing a big challenge in which it has to succeed in order to end any bad effects on providing good electricity services to the citizens in the future. It has to work on employing the modern technologies which developed countries use to diagnose damages. They are used to identify damages, limit the happening of these damages and the negativities that may happen in the services offered to the citizens. The Egyptian Government has to appoint professional engineers who can manage well and have good perception in order to work on fixing the damages that may happen due to the pressure of the increasing consumptions of services by the citizens. I hope that Egypt will reach a prosperous stage of progress in all sectors.
سيف

2012-7-26

Egypt is the real winner because the elections became trustworthy and the Egyptian citizen realized that he has a valuable voice that should be granted to those who deserve. The Egyptian citizen is also a winner in the elections whether he was an ordinary voter or winning president, who knows that his continuity in the office is contingent upon the satisfaction of the citizens. The government is no longer the controller of everything in the country without any value to the citizens, who were never considered by the officials. However, today, the officials will try to do their best to satisfy the citizens and to ensure that they would continue in their offices. Egypt won also because this wonderful scene has many positive results and influences on the Egyptian economy. It will also bring back the respect for Egypt and help it restore its regional role after losing it in the past. The Egyptian citizens everywhere also feels that they have dignity and that no one can humiliate him any longer, because he has a powerful president and government that was elected according to his own wishes. They would defend them and all what I wish today is to stop the calls mutual accusations and mistrust. We shall accept the results to start a new phase in our life. The whole world is happy for us and we are very proud of ourselves and our experiment. There is no doubt that some people were waiting for the failure of the elections to keep their interests.
علاء هادي

2012-7-14

There is no doubt that at the beginning of any reformation, the problems and defects have to be discussed so that we can find solutions and modifications for them. We have to define the problems that we need to solve in all fields, even if we have to establish a full international life system from scratch, as if there had been none before on the surface of this country, so that we can create a system that guarantees a highly sophisticated life for all Egyptian citizens. Now we can await a great, bright future that may dazzle the whole world with its spark, coming from our beloved country, the Arab Republic of Egypt, if we study each field in the best way and make use of all the resources for the benefit of our beloved Egypt and not for personal gains. Egypt is filled with resources and fortunes that the people have never enjoyed because they were not dedicated for them; they were stolen by their protector. This is the day that Egypt becomes a country for all Egyptians. The Egyptian citizens have to unite. Their hearts, thoughts, ambitions and aims have to be united for the benefit of this land that embraces all of us. There are no differences between us, regardless of the religions, posts or works. All of us are Egyptians; all of us are brothers. We are in desperate need to be one heart, a heart that knows no grudges or evils, a heart that only wants to be proud of its country in the middle of any place or country.