Major Problems Facing the Egyptian Economy

Egypt recently requested a $12,000,000,000 USD loan from the International Monetary Fund to be paid back in three years. On November 11, 2016, the request was approved, and the first payment to Egypt, totaling $2.75 USD, will be delivered on November 15, 2016. Furthermore, the Egyptian government has already implemented the conditions imposed by the bank. These conditions include floating the Egyptian pound and cutting subsidies on fuel. However, while the government has not totally removed fuel subsidies, they have increased the price, which will save $22 billion E. L. annually, finally helping to decrease the budget deficit that has persisted for over forty years. The fuel subsidies will be totally removed.

Due to the lack of economic development during the forty-year period prior to the 2011 Egyptian Revolution, the government continued to borrow money to provide basic services.

Recently, the Egyptian Census Department estimated the national debt at 2.3 trillion E.L and the foreign debt at $68 billion. The yearly interest on both debts is 290 billion E. L per year which is the largest portion of the $930 billion E. L. government budget. The second largest portion of the government budget is 230 billion E. L. in the salary of seven million government employees.

The third largest portion of the budget is the 210 million E. L. subsidies towards fuel and food. The subsidies were originally initiated to help the poor population in Egypt, but they are the ones who benefit the least from them. Recently, Abou Baker al-Jundi, Director of the Egyptian Census Department, stated that 77% of the wealthy people in Egypt possess ration cards while only 6% of the most poverty-stricken have no ration cards. The food subsidies are a waste of government money that ought to be reformed so that the truly destitute can get the help they need. Similar situations conform my view on the fuel subsidies. There are more than 9,000,000 privately owned cars. That segment of the population is relatively small; their cars should not be subsidized. Furthermore, fuel subsidies for industry and electrical power should be evaluated.

The forth largest portion of the government budget is 200 billion E. L. to provide services to education, health services, housing, transportation, agriculture, water, and sewage services. The services provide in these varied sectors is deplorable due to the meager money provided. For example, it is sad to say that the quality of education is very poor by any reasonable standard, as evidenced by government reports that over one third of the Egyptian population is illiterate. According to the minister of education, the problems that dominate the educational institutes are the result of forty years of the government ignoring necessary basic reforms. He pointed out that the number of students per class in many schools exceeds 140. In order to cut the number of students in class, the government needs to create more than 150,000 new classes, which could reduce the class sizes by up to half.

Such a negative situation is also prevalent in all sectors of Egyptian society. Among the major factors which contributed to the economic difficulties the government is facing is the high rate of population growth. According to a recent report issued by the Egyptian Census Department reveals that Egypt's population has reached 94 million and is projected to exceed 102 million by 2020. Egyptian population grows at a rate of 2.5% per year, meaning 2.6 million new mouths to feed each year. An urgent and effective program of Family Planning and Birth Control is badly needed to stop the deterioration of the economy. Such an idea is hardly novel. It began in the 1930's, and was officially supported after the Revolution of 1952. Nevertheless, while the program was not successful at the time, it must be re-implemented. Despite the progress which has been achieved during the past two years under the leadership of President el Sessi (especially in the areas of power production, road and house constructions and completing the Suez Canal project) the national economy remains stagnant. Nearly one third of the population lives below the poverty line and unemployment is exceedingly high. The government so far has failed to focus on industrial development. There are more than 4,000 factories that have closed with no attempt to revitalize them. Furthermore, a rise in importation and fall in exportation has led to a heavy decline in foreign currency in the central bank.

Recently, government officials reported that imports exceeded $40 billion per year, and exports decreased to $18 billion. Such a policy increased the rate of inflation which led to higher prices and shortage of basic food items such as rice and sugar.

The trade policy is influenced by traditional corruption policies that has been going on for more than forty years.

The loan granted to Egypt will enable the government to meet its obligations to pay some of its foreign debts, but it will not revive its economy. Egypt needs a major economic plan made by expert economists to save its economy, which still requires heavy financial investment and time before the economic wheel will start turning.

The Use of Gold as Reserve to Support the Egyptian Pound

Arab Net News reported (10/19/2016) that the Egyptian government is shipping to Canada its monthly gold production of 344KG from the Sukari mines to be purified and sold in the world market.

The Sukari mine of Egypt is classified as one of the ten largest gold mine in the world.

In some western countries such as the US, gold has been kept as reserve to back up the security and value of the dollar in the world market.

The Egyptian pound value in the Egyptian market as well as in the world market has been decreasing steadily especially in the last few years. One of the reasons is the fact that the number of US dollars in the Egyptian Central Bank has been decreasing substantially. Presently, the official rate of the US dollar is equal to 8.83 LE, while the value of the dollar in the black market is almost double the official rate (1 dollar equals 15.50 LE).

Egypt is exporting a small amount of gold. The question to be asked why doesn’t the Egyptian government put some of that gold in reserve to back up the value of its currency, and to stop decreasing the value of its pound.

This devaluation of the Egyptian pound is having an impact on the Egyptian economy. It led to an increase in the cost of living, a situation that the public is objecting to.  

The 8^th of September- International Literacy Day

The United Nations (UN) and the United Nations Educational, Scientific and Cultural Organization (UNESCO), designated September 8^th of each year to celebrate and remind people around the world to eliminate illiteracy.

Many countries worldwide have succeeded in doing so, while other countries have a long way to go.

Unfortunately, the Arab world, which consists of twenty-two states, still has high illiteracy rates.  More than 100 million people in the Arab world out of 400 million are classified as illiterate. However, the illiteracy rates among Arab states fluctuate. States with smaller population size in general tend to have high literacy rates such as Tunisia, the Emirates, Lebanon, and Jordan. Most of the states with large population size such as Egypt, Sudan, Morocco and Yemen, have a high illiteracy rates.

For example, Egypt, where one fourth of the Arab population resides, has one of the highest illiteracy rates. Egypt population now exceeds 94 million people, and more than one third are classified as illiterate.

Egypt has more than 47,000 schools, but many are unfit as places of learning. Furthermore, many of these schools run on a two-shift basis daily to accommodate children of school age. Keep in mind that Egypt adds 2.6 million newly born babies to its population per year.

Recently, the minister of education stated publically that the government needs to create more than 40,000 new classrooms to cut the number of students per classroom by half. In some of the classes, the enrollment exceeds 175 students.

Regrettable to say, education in the Arab world is not classified as priority one task. The political leadership has failed to come up with a strategy to eliminate illiteracy. For that and other reasons, many countries around the globe are progressing, while the Arab world is regressing.

President El Sessi Economic Achiements

The election of a new head of state is always scrutinized and somewhat criticized by lay people.

Less than two years ago  (7/12/2014) president El Sessi was elected by more than 24 million Egyptians who constitute half of the eligible voters.

Following the president’s election, negative campaigns by some journalists and politicians started to emerge. They maintained that the new regimes was authoritarian and had no economic planning.

In my opinion this is a misplaced criticism. The president and his government are facing tremendous challenges: terrorism, lack of foreign currency, decreases of tourism by   80%, meager economic economic resources, and above all the continuous population increase.

If we examine the transitional political and economic period following any revolution one notices that political and economic stability is not achieved instantly.

President El Sessi has been in power for less than two full years, and in spite of the poor economic situation he inherited from the previous regime and the continuous threat of terrorism, his achievement is quite impressive.

The followings are an enumeration of his achievements.

1.   The development of the Suez Canal, which took one year to complete at a cost of 60billion Egyptian pounds.

2.   The construction of more than 5000 Km of new roads.

3.    The construction of 1500 bridges. This new transportation network connects the various governorates.

4.   The construction of 6 new towns to allow urban expansion, economic development and to accommodate the increasing number of the population. It is estimates that 2.6 million people, per year, are added to the Egyptian population.

5.   The modernization of the electrical power generators. A German company builds the new generators and it led to the doubling of power. It exceeds 26,000-mega watt.

6.    The construction of 600,000 housing units to accommodate low-income families.

7.   The construction of new sewage pipes, with recycling stations, in several villages. This will provide clean water for irrigation and make available 3.7-7 billion cubic meter of water per year.

8.   The reclamation of 1.5 million feddans in Al Farafra. It is a large agricultural project, which is expected to be completed in 4 to 5 years at a cost of 60 bullion Egyptian pounds. According to agricultural economists the project Egypt will be self sufficient in food production, especially the production of wheat. On 5/5/2016, president El Sessi visited Al Farafra to celebrate the hisad of wheat from 5000 reclaimed feddans. Furthermore, villages are constructed with basic infrastructure for those who will be working the land, and wells were dug to provide water for agriculture and human consumption. It is estimated that the water well will provide 7 billion cubic meters of water per year.

9.   Electrical power in this region will be provided by means of solar energy.

The above are among the major economic developmental projects president El Sessi has initiated with the help of the Egyptian army.

This is an impressive achievement in light of the short time he has been in power and considering Egypt poor economic resources.

On May 9, 2016 the Egyptian newspaper Akhbar el Yom published the result of a national opinion survey regarding president El Sessi after being in power for 22 months. It revealed that 79% of the respondents are supportive and satisfied with the president performance and 13% are not satisfied.  However, 69% of the respondents said they will re-elect El Sessi for another term.

  

USA Support of Israel

Recently, the Israeli prime minister, Netanyahu, stated that the occupied Syrian Golan Height is part of Israel. This occupation is violating the UN resolution as well as international law.

Since its creation, the US government has supported the Israeli aggression.

Few days ago the NYT stated that President Obama’s administration has constantly supported Israel by, more than any other American president, by using its right to veto any resolution  at the Security Council, which is against Israel.

The rejected resolutions and the Israelis ignoring international law, allowed them to increase their aggression against the Palestinians. They demolished thousands of Palestinian homes as part of their ethnic cleaning strategy. Furthermore, 85% of Palestinian lands are under Israeli rules.

The US policy has been the major factor that has contributed to the rise of international terrorism.

Political Influence of AIPAC

The American Israeli Political Affairs Committee (AIPAC) is the strongest and most influential political lobby in the USA. Some of its member, 18,000, met recently in Washington D.C.

The Committee (AIPAC) extended its invitation to the five presidential candidates to attend their meeting and to express their political views towards Israel.

The only candidate who did not attend the meeting was Senator Bernie Sanders.

During his campaign, Senator Sanders criticized the Israel government policy towards the Palestinians. He called for an end to Israeli occupation of the West Bank and an end to the blockade of the Gaza Strip. Furthermore, Senator Sanders criticized Mr. Netanyahu for not understanding Palestinians needs, and called for the creation of a Palestinian State, stating that we cannot be 100%supporter of Israeli policy and ignore the rest of the region. It should be stressed here that Senator Sanders is Jewish.

The other four candidates, Clinton, Trump, Cruz and Kasich promised more military and economic aids to Israel. Kasich went so far as to say the Palestinians are terrorists.

Most of the American politicians, since the creation of the State of Israel, lacked objectivity. This becomes more apparent during election time. They ignore American national interest in order to be elected.

Such foreign policy contributes immensely toward the rise of international terrorism.

The Corrupt American Congress

The month of March will be always remembered as the month the US invaded Iraq 13 years ago.

Unfortunately, only one American politician, senator Cruz, stated publicly that the invasion of Iraq destabilized the Middle East region. He furthermore said that the removal of Saddam Hussein was a mistake because under his rule Iraq was stable.

Senator Cruz and do not support him made a correct statement. However, he did not elaborate on the invasion, which led to the killing of more than one million Iraqi civilians, and the destruction of Iraq physically, economically and politically. It also led to the creation of ISIS. He also did not refer to the killing of more than 4500 American soldiers. They died in vain!

Furthermore, Cruz did not bring up the fact that Bush’s invasion was based on fabricated false reports, which he used to misled Americans, and justify the Iraqi invasion.

George Tenet, Director of the CIA, stated publicly “Iraq posses no weapons of mass destruction and Saddam Hussein does not pose threats to the US.”

It is regrettable that the US Congress ignored the CIA report and surrendered to lobbyists’ s pressure supporting the Iraqi invasion.

For more information see The US Invasion of Iraq: Conspiracy and Its Tragic Aftermath. Amazon publication, 2014

Egyptian Pressing Need

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During the third week of January (1/18/2016), several Egyptian newspapers reported that the minister of ‘al awqaf’ is supporting the building of 10 new mosques in 10 governorates.

Is this a priority and a pressing national need? Top government officials are still not aware what are the real needs of the country.

I would like to stress that there are already ten of thousands mosques all over Egypt, hence efforts should be directed to the real pressing need in Egypt, SHORTAGE OF SCHOOLS, especially in rural Egypt. This is, of course, reflected in the high level of illiteracy.

Aren’t those officials, who advocate the building of more mosques, aware of the famous Quaranic imperative verb “iqra’”?

The Quran advocates learning and the pursuit of knowledge. How can this be achieved with the lack of education in many parts of Egypt? Actually, the pursuit of learning is the best method that can be used to fight false interpretations of Islam, as well as to fight terrorism. Hence, education and the advancement of learning should be the first priority of the Egyptian government.

The following statistics was recently published by the Egyptian Census Department.

1: there are 4655 villages in Egypt.

2: there are elementary schools in 95.3% of Egyptian villages, but there no secondary schools (high schools) in82% of those villages. Hence, 60% of the villages need the construction of more schools. It was also reported that some schools operate on two shifts basis. Furthermore, the census data reveals that only 3.8% of Egyptian villages have public libraries.

There are more than 47,000 schools in Egypt. More than 40% of those schools are quite old and not fit for the advancement of learning.

The Egyptian educational system, especially at the lower level, is definitely not meeting the challenges of the 21-century.

The lack of resources, and of qualified teachers is mentioned as being the major reasons for the lack of a good educational system.

However, there are different ways of rectifying the educational system and ensure its future success. The simplest one is to divert the subsidies of oil to education.

During the early 1960s the educational system of Egypt was more advanced than that of South Korea. But, there was an awakening in South Korea and the government started to allocate 20% of its budget to education and research.

The result of such measure placed South Korea among the most advanced nations.

Let us hope Egyptian officials use this example to further the development of the educational system in Egypt.