Egypt eyes tough eco­nomic re­forms

The Myanmar Times - - International Business -

EGYPT hopes a US$12 bil­lion fi­nanc­ing deal with the IMF will usher in an eco­nomic turn­around but real progress hinges on a tough re­form pack­age avoided for decades to stave off un­rest.

The fi­nanc­ing over three years – deemed an en­dorse­ment to at­tract more for­eign aid – would go to­gether with a cur­rency de­val­u­a­tion and stream­lin­ing of Egypt’s bloated sub­sidy sys­tem.

But ex­perts warn that the loan alone would serve as lit­tle more than an “aspirin’’ and a stop­gap for a deep-rooted eco­nomic malaise.

In a coun­try where many rely on state-sub­sidised bread and im­ports for ba­sic food­stuffs such as wheat, in­fla­tion has al­ready risen at a time of low for­eign cur­rency re­serves and a thriv­ing black mar­ket ex­change.

More than five years af­ter its 2011 up­ris­ing – partly fu­elled by eco­nomic dis­par­i­ties – that swept away vet­eran strong­man Hosni Mubarak, the coun­try is still reel­ing from the fall­out.

The up­ris­ing un­leashed years of tu­mult that cul­mi­nated with the over­throw of pres­i­dent Mo­hamed Morsi in 2013 and a ji­hadist in­sur­gency that has driven away tourists.

Since Mr Morsi’s over­throw, Arab states of the Gulf which op­posed his Is­lamist move­ment have show­ered Egypt with over $20 bil­lion in aid and in­vest­ments, but that has proved to be a short-act­ing salve.

The dire state of the econ­omy, ac­cord­ing to Pres­i­dent Ab­del Fat­tah al-Sisi, makes the long de­ferred eco­nomic re­forms in­evitable.

The IMF loan is es­sen­tial to bol­ster for­eign cur­rency re­serves which are down to $15.5 bil­lion.

But this will not suf­fice on its own and may only ag­gra­vate the plight of the lower and mid­dle classes. –

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