Egypt economy still reeling from September 11 as tourists keep away
At the great pyramids of Giza, souvenir sellers, camel riders and guides sit idle on a wall, and a single tourist bus is parked in a vast square intended for hundreds of vehicles. Ancient mortuary halls at the foot of the pyramids that lie south of Cairo are closed "because staff have been dismissed because of the lack of tourists," one guide told AFP.
The Egyptian economy is struggling to recover from the effects of the September 11 attacks on the United States, particularly in the key tourism sector, Maged Shawki, adviser to foreign trade minister, told AFP. Even before the attacks, the economy had been battered by a crisis in the Egyptian pound and a chronic lack of dollars, and intervention by President Hosni Mubarak and pledges of international aid since September 11 have yet to bear fruit.
Tourist enterprises have laid off around 10 percent of their employees since September 11, according to a foreign trade ministry study on the repercussions of the attacks. At the end of October, Tourism Minister Mamduh Al-Beltagi estimated the decline in activity at "between 40 and 45 percent", without specifying whether he was referring to the number of tourists or to receipts, adding that he expected a "steeper fall" in the next few months.
Tourism officially represents five percent of Egypt's gross domestic product, but its real impact is estimated to be as high as 15 percent of GDP, according to a report by the US embassy in Cairo. The sector is Egypt's principal source of hard currency, with receipts reaching a record $4.3 billion last year. But one official last month forecast that 2001 revenues would slump to $3.2 billion. Cancellations were estimated at 35 to 50 percent in October and November and reservations for the winter are virtually non-existant, according to the foreign trade ministry.
"The big hotels have seen steep declines in occupancy and are waiting impatiently for the arrival of the 'Arabs', the rich tourists of the Gulf, for the feast of the Bairam" at the end of Ramadan next week, said one hotel director. The global slowdown is also weighing on other sources of hard currency, such as Suez Canal revenues and petroleum exports.
Following the attacks, the government predicted a decline of $184 million in revenue from the Suez Canal in 2001 from nearly two billion dollars last year. Falling oil prices will also impact on revenues in the petroleum sector, which represents nine percent of the country's hard currency income. September 11 has only added to a crisis that has squeezed the nation's economy for two years, marked by a shortage of liquidity.
The government devalued the pound in August for the second time in six months, from 3.90 to the dollar the previous year to 4.25. And in an attempt to redress the situation, Mubarak intervened twice in November, warning that boosting exports was a matter of "life and death" for the economy. Mubarak demanded a reduction in imports and ordered consumers to turn to local products, and reshuffled the cabinet, eliminating a separate economy ministry and granting greater autonomy to the Central Bank.
According to Central Bank data, exports averaged six billion dollars a year from 1998 to 2000, compared with imports of $17 billion a year. Recognizing the "September 11 effect" on tourism, the United States and the European Union both announced that they envisioned economic assistance for Egypt, a key ally of the West in the Arab world.
"We are aware that Egypt is having some financial and economic difficulty now (with) the drop in tourism and we are looking at ways that we can accelerate some of our economic cooperation and other programs," US Secretary of State Colin Powell said last month. — (AFP, Cairo)
by Marwa Abdel Rehim
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)