Egypt economy foots the bill for Mohammad Mursi policy
Egypt's economy was a key casualty for the one-year rule of former Islamist president Mohammad Mursi, according to economic experts.
As the military toppled Mursi on July 3 following three days of mass street protests against him, economic figures available show that Mursi has deepened the populous country's economic woes.
When Mursi took office on June 30, 2012, Egypt had foreign currency holdings of $16 billion compared to $36 billion when his predecessor Hosni Mubarak was forced to step down in February 2011. The reserves, necessary to cover Egypt's food and fuel imports, dropped to $14.9 billion at the end of May, according to the Central Bank of Egypt. The figure includes $11.5 billion in grants and loans from Qatar, Libya, Turkey and Saudi Arabia.
"Mursi and his Muslim Brotherhood, in economic terms, were worse than Mubarak," said Rashad Abdu, the head of Cairo-based Egyptian Economic Forum. "The Brotherhood members are mainly merchants with no clear economic vision or managerial skills. So, Egypt's economic problems have gone from bad to worse at their hands," Abdu told Gulf News.
"Nor did Mursi and his group show any interest in depending on competent specialists in all fields. Their sole obsession was to tighten their hold on all state institutions by employing people, whom they trust, not efficient experts."
Abdu gave the example of Mursi's prime minister, Hesham Qandil, who is an expert on irrigation and water resources. "He had no idea about how to fix the economy," said Abdou, adding that Mursi's insistence on keeping Qandil in the post was a potent message that his administration was not serious about revitalizing the economy.
"In the recent cabinet reshuffle, carried out by Qandil, the planning portfolio was given to an engineering professor, while the investment minister was a graduate of an English language college whose experience was that he was an employee at a mobile phone service provider. Both were appointed in the important posts just because they were Brotherhood members."
According to official figures, unemployment rates in the final year of Mubarak stood at 3.9 per cent of Egypt's workforce. They rose under the generals who took over after him and ruled for 16 months to reach 10.5 per cent. At the end of Mursi's first year in office, unemployment hit 13.3 per cent, reported the state-run Central Agency for Public Mobilisation and Statistics.
"When Mursi became president, the budgetary deficit was estimated at 170 billion Egyptian pounds (around Dh100bn). On leaving, the figure soared to 220 billion pounds," said Abdou.
"While around 300 million-dollar-worth new investments entered Egypt under Mursi, 14 billion left during his first year in power because of his failure to end political and street turbulence in the country."
The tourism, a key earner for Egypt, failed to achieve a complete recovery due to security breakdown and frequent clashes between Mursi's backers and supporters.
Around 11.5 million tourists visited Egypt in 2012, generating revenue of around 10 billion dollars, compared to 14.7 million tourists in the pre-revolution peak 2010 when the industry earned 12.5 billion dollars.
Mursi's rule was marred by daily problems in petrol, electricity and water supplies, fuelling public discontent.
"The Egyptian pound fell from 6.7 against the dollar to a record 7.4 during Mursi's year. In a country, which imports more than 70 per cent of its food needs, this depreciation is highly serious as it has sent prices of commodities at home higher," said Abdou.
He added that Mursi's Islamist-dominated government tried to plug the runway budgetary deficit by levying more taxes and tariffs on several imports, "making life unbearable for increasing numbers of Egyptians".
"These muddled policies have diminished chances for export and job creation. They have also undermined confidence in the economy especially after Egypt's credit ratings were downgraded four times in a year," he added.
"The situation prompted Egyptians to convert their savings from the local currency into the dollar, the exchange rate of which soared to 7.4 against the Egyptian pound. All this combined to increase public disillusionment with Mursi and prompted mass protests against him that reached their climax on June 30."
Prolonged political tensions between Mursi and the opposition repeatedly hindered securing a 4.8 billion dollar loan badly sought by Egypt from the International Monetary Fund to prop up the country's finances.
"Mursi followed Mubarak's bad economic policy, resulting in decline particularly in agriculture and the labour-intense textile industry," said Ahmed Al Najar, an expert at the state-run Al Ahram Centre for Strategic Studies.
"Debts at the end of the Mubarak era reached LE982 billion. Under the military, they rose to LE1, 238 billion. At the end of Mursi's first year in power, they soared to LE1, 480 billion," he said. "Public spending on healthcare in the 2013/14 drafted by Mursi's government accounted for 4.7 per cent of the allocations compared to 5 per cent when he assumed presidency."
Al Najar noted that the right to employment was neglected under Mubarak, a situation that persisted under Mursi as well.
"For example, Mursi promised to increase pension allocations from LE2.5 billion to 7.5 billion. He did not keep his promise as the pensions increased only by 1 billion, a sum that actually did not make up for the price hikes."
At the end of Mursi's first year in office, poverty rates reached 25.2 per cent of Egypt's 85 million population compared to 22 per cent in Mubarak's last year in power, said the Central Agency for Public Mobilization and Statistics. Inflation, which two years and half stood at 3 per cent, has increased to range between 13-18 per cent, according to experts.
Meanwhile, the Egyptian Food Bank, a non-governmental charitable institution helping the poor, has recently announced that more than 42 per cent of Egyptians are living below the poverty line.
- Wishful thinking? Egypt's investment minister banking on billions worth of foreign investments
- Egypt's inflation rate hits highest levels since pre-Arab Spring year
- Egypt’s new president-elect will not say no to IMF loan
- Egypt's IMF deal delayed over political turmoil
- Morsi calls for greater Arab economic intergration