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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.
