Egyptian Chronicles: Economic Crises !? Nothing new we have seen it before

Wednesday, May 18, 2011

Economic Crises !? Nothing new we have seen it before

If 1% of the Egyptian population supports Mubarak and wants this revolution to fail , then expect a lot of trouble from those 850,000 enough to create chaos in the country .

Egyptian journalist Saad Hagras

All people including the Mubarak orphans in the mainstream media “and God they are so many” are blaming the revolution for the bad economic situation and how the revolution is dragging the country to bankruptcy. The people are extremely worried especially after that press conference of the SCAF members with the media we found a very dark image of our economy and that we are entering a dangerous zone now.

We do not have a great economic situation currently for sure but we have to ask ourselves : When did we have a great economic situation before in time of Mubarak ?

We do not have a great economic situation and our economy is on the verge of catastrophe for sure but since when it was not on the verge of catastrophe during the time of Mubarak. It is a normal thing if we consider the fact that the Mubarak regime used to hide facts from us and used to divert our attention to things that do not matter but this is the results of Mubarak’s regime corruption and wrong economic policies.

The SCAF members spoke about tourism sector and how it is being destroyed and clearly that those economic experts they sat with did not tell them that the tourism sector is not being destroyed by the revolution or by the protests or by the strikes . Tourism is being destroyed by the lack of security in Egypt. Greece has got a lot of protests and strikes yet tourism is not harmed there because there is security in Greece. The lack of security is not the responsibility of the revolution or strikes or the protests , it is the responsibility of the ministry of interior. I do not understand how the police task force still get salaries from our taxes when they are not doing their job as they should.

People are blaming the revolution for new oil crises despite this is not the first time it happens , in fact some people tend to forget in the past few years of Mubarak we have even more worse crises. Where was the revolution when people were actually killing each other to get a loaf of bread during the time of Mubarak !?

The terrible economic situation during the Mubarak era results of corruption and wrong economic policies were among the reasons of the

Already I would like to tell you that Sharm El-Sheikh is completely paralyzed because Hosni Mubarak is there in the hospital. “Another good reason to transfer him to Tora prison hospital”

I also want to tell you that Suez canal’s revenues reached to LE 7.8 billion in the last 3 months. 

I admit that some of our revolutionaries have ignored the woes of Egyptian street and did not represent practical solutions for our economy nor did they deliver the people’s economic demands to the SCAF with practical solutions through the media. Needless to say most of the mainstream media is part of this counter revolution term.The unsurprisingly true orphans of Mubarak who can not stomach the revolution are doing their stupid to turn the public against the revolution , you can’t blame them because they used to live from that regime.

Amr Adeeb is scaring the people and is telling them that there will be no food in next Ramadan day and night , this is just an example. There are other journalists like Adel Hammouda are insisting that the SCAF should reconcile with the corrupted businessmen especially from the Gulf so that the FDI would not escape !!?

Let me get this straight , this revolution is not against businessmen or FDI or the Gulf investment but it is against corruption.  We want the state of law , We want transparency and I believe true economic development needs these two important factors to flourish. 

We must show to the people our economic solutions to get out of this trouble , we also must make them understand that the true fruits of revolution especially the economic and social fruits take time , it can take couple of years actually. If we take an example of the 1952 coup turned in to revolution , we will find that the drastic changes in the economy regardless of what you think about it took years till 1960 when we have turned in to a true centralized economy.

You must know things are not that dark and that all what you hear and read is another attempt to scare you from the revolution. Listen to Dr. Ahmed El-Sayed El-Naggar clarifying to Ibrahim Eissa the myth and realty of our economy now.

Regarding Egypt’s economy melt down

Now I will go back to the quote  I started with my post , the quote of journalist Saad Hagras about Mubarak regime’s supporters . This quote describes what we see currently happening. The Mubarak regime’s supporters who used to benefit from its dictatorship are creating that chaos we see. Whether it is security or economy , search for those behind and you will find someone who used to have influence and power in time of Mubarak.

In our situation here I find the NDP corrupted businessmen are playing a dirty role along with the Gulf countries , yes the Gulf countries that only care for their corrupted businessmen. Our brothers in the Gulf threatened us and pressed the SCAF to accept reconciliation with their tycoons , the corrupted tycoons.The SCAF unfortunately accepted the reconciliation with the Gulf and Egypt tycoons but these tycoons should not be happy with this for too long. The Gulf tycoons also should act like men and stop threatening us by very international courts because we will not forget this and once we will have an elected parliament and government , we will have new economic policies that will correct everything in the right direction.

I want those who understand economy and care for the country to start talking to the public and tell them the truth. If couple of economists start to blog in easy Arabic , it will be more than great.

One thing I will ask to do now is to buy Egyptian products and support our industry, I swear we can live without unneeded imports like cat food and orange juice.

I am calling all the real honorable Egyptian national businessmen to help us now , we should not give up to the blackmail from the Gulf countries and from the corrupted Mubarak businessmen. 

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17 comments :

  1. Bravo Zeinobia...Very commendable of you to open this vital topic and explain that well.Blogging isn't enough for an issue with this magnitude.It has to be covered by even-handed mass media on the one hand.On the other hand voices of economists and socio-political experts must reach out to the government and communicate plans for actions.It's not rocket science,many countries did it before us and did quantum leaps in the span of few years.Brazil under Lula is a great example.Now there are two major prerequisites :Serious cleansing job of the remnants of Mubarak's regimes who are causing continuous unrest,reinstating order and discipline in Police forces.@amrazim2808

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  2. Egypt has everything. The tourists will come back. The rich countries, in my opinion, should help stabilise the economy and I think Egypt will get the credits it is seeking. Things should turn around within a year, after the election if the government is composed of honest, moderate and capable people of which I am sure there are many in Egypt.
    The SCAF has to take steps to prevent capital flight, with which most banks will cooperate.
    Business leaders have to treat the situation as an emergency and think of the country.

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  3. Tourism collapsed because of the revolution! "Tourism has not suffered, he destroyed ..... Tourists survive without Egypt, a lot of many other countries.A Egypt without tourists? Because Tаhrira now a lot of people lost their jobs, and to blame you "And the fact that the food will not blame you! A cat food, orange juice, if people are buying these products means a demand, and demand creates supply.Esli you have no ekonomocheskogo education and general brain that does not mean that the so- thinks all the people of Egypt Tahrir is not the whole of Egypt! ur back in time, we eat beans! Tourism sin, why Egypt tourist money? Why Egypt investment? Stone Age ...... once again convinced of your stupidity .. .. and ignorance ...

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  4. for 4 months destroying the country .....

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  5. Zenobia, why are you so worried about cat food? You have a personal hatred for the owners of these animals? "By the way, while Mubarak was not a cat or a dog?" I think they should be the same arrest and check for any accounts abroad.

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  6. Well the army control about 40% of the economy so I guess they have no one to blame but themselves. Just keep the BiscoMisr coming I NEED MY COOKIES!!

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  7. well to be honest, when a little disruption causes the entire economy to collapse and the country becomes bankrupt then that simply means that was a bogus economy anyways and it was bound to fail sooner or later. a powerful sustainable economy will overcome anything from an earthquake to a tsunami to a nuclear crisis.

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  8. Egypt's economy suffered a crisis better than other countries .... and now you have destroyed everything, because at the moment no one is engaged in the economy, and a crowd of revolutionaries Tahrir does not have a good brain for it! For them, the main quest for mythic money in foreign banks You are looking at the money to restore the economy? Or have a hand outstretched for peace? "Well, every janitor can uptavlyat state!

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  9. I am with the revolution because it secures the future! Mubarak and his gang were stealing all egypt's wealth. Bombing sharm el sheikh, and the Alexandria church was by old regime, they didnt care!
    People who are objecting revolution do not care about Egypt or the well being of the future of Egypt!! They dont see farther from the tip of their nose!
    If all corruption, illnesses and lack of propper education continued Egypt would face Thugs hunger revolution!! that would have been destructive !!

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  10. tourism shouldnt be a main,corner stone in economics,it should be a booster or else whenever you have some sort of disagreement with any country they'll stop their flow of tourists.
    Also when you get people getting paid millions per month while the professors of universities get paid 3 thousands per month...that's a cause of crisis!
    Also,I'd like to point out to one thing...who found a temporary solution to the water problem created by Ethiopia?not the SCAF for sure,revolutionaries,eh? And water problem isnt just economics,it's national security...why dont they get a thank you for that?

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  11. What the twitter / revolutionary consensus has wrong about the Egyptian economy:

    1 - Far too interested in pointing out that the problems with the Egyptian economy were inherited from Mubarak times / created by his scorched earth "deliberate infilat amni tactics" / thawra modadda, that you / we seem to be interested in realizing that whoever created this mess, it is a big wet sticky mess and like it or not we OWN it

    2 - The persistent illusion of "we'll get back all the stolen money" is just that, an illusion. Many of the "should be illegal" practices under which a lot of real money was stolen are actually codified in law, so my best estimate is that we're able to identify maybe 50% of ill gotten gains, manage to get court rulings regarding 25% of those and actually manage to repatriate less than 10% of THAT. sad but true based on previous cases of fallen 3rd world country regimes.

    3 - I pity Sameer Radwan, hes stuck between "the revolution's demands", the SCAF's need for social / price stability and the years of theoretical experience he's had that tell him that 90% of his budget is going to solve short term issues and NOT putting Egypt on the track to be the next China India or Brazil. Meanwhile, he inherited a a big ass budget deficit and tax revenues that are falling off a cliff.

    4 - By my math, Egypt is heading to where Greece is today on an express train; in exactly one year we'll be there absent a stunning turnaround in economic performance. And guess what, we're not a part of the EU and contrary to popular beleif the gulfies wont bail us out (not because they're pissed that we screwed DAMAC or put the Mubaraks on trial, but because they're scared shitless of us; see Jordan and Morocco admission into the GCC)

    5 - Some of the corruption investigations have hit people that everybody in the business / finance community knows are clean (eg. Ahmed Heikal of Citadel Capital) this has led many Egypt observers to conclude that the post revolution "wholesale corruption cleaning" will also include score settling by people from the fallen regime. So the 16 bn USD of FDI that were used to plug Egypt's forex deficit have dried up to a virtual zero

    6 - Any economist worth his salt will tell you that the best policy move Egypt can do right now is a "managed devaluation" (Malaysia 1998). Sadly, the SCAF is obsessed with stability and will keep draining our meager savings to avoid that. What makes the SCAF so obsessed with stability? the fact that every day they have to address 20 protests and related demands, fe2aweya or otherwise

    7 - While we're at it, I am all for a 1200 min wage, but a max wage is not necessary nor is it wise. Politics aside, alot of our policy government are staffed with some of the country's best and brightest who are getting paid very high salaries by government standards (low or reasonable by private sector standards) if you force these people to leave we'll go back to having the likes of Kamal el Ganzoury directing Egyptian policy (the former PM was nicknamed "Gonzorious; Greek God of Stupidity" in economic research circles

    - igetpaidtoanalyzeeconomiesandipromiseyouegyptisprettyscrewed

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  12. nope, you're twisting facts to make your point. In fact countries were able to restore ALL stolen wealth, I will give you a couple of examples, the case of Idi amin of Uganda and Sanii Abachi of Nigeria, all their assets were restored and even UK forced Isle of Man to freeze ssets against their own local laws. If businessmen are hoonest, they have othing to be scared from but unforutantely most business men in that past era, especially close to the ruling elite and NDP were pretty much corrupt. There should be a max salary in Governments, of course there should because there's no capital... every gov employee gets paid from our taxes and from the coffers, they should be allowed a decent salary for an honarable and comfortable living but some were being paid in million/month...don't you think that is a bit extreme for a developing country? the incentive for those serving as tp officials should be serving their country and making it better...not money so Ganzoury was stupid, I guess you think Nazif is a great economist??? and finally No, there is no way we are heading where Greece is, if you were truly an expert who gets paid for this bollocks, then you should have known what started the mess in Greece, we are very different economies althoug we do depend on Tourism we have a much diverse economy..not even comparable to Greece's. Greece went on a expenditure spree.. almost brainlessly, borrowing like crazy from the EU. it began with the Atens olympics 2004 and then things got even messier with 3rd party loans and mortgages and when it was time to pay up?! the rest we all know... so any cmparison between Egypt and Greece is not just foolish, but intentionally presented that way to scare people.

    idontgetpaidtoexposescumbagslikeyoubutipromiseyouareprettyscrewed

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  13. I would get offended by you calling me a scumbag, I will however disregard that in an effort to continue what could be an interesting argument for whoever scrolls this far down. Now back to arguments:

    Idi Amin was a Bona Fide idiot (having lived in Uganda for a year I assure you the man was retarded) and Abacha was not much better. I think it's probably safe to assume that Gamal Mubarak; a Bank of American trained investment banker would do a MUCH better job at hiding his family's assets (not to mention much more creative about the means for acquiring them in the first place), especially that he had almost 3 months to freely do so (except the swiss money which was frozen instantly). I really hope I'm wrong but I don't think I am. Not to mention, if we take the recently floated estimate of Mubarak's wealth at 11 Billion USD at face value, and assume we get ALL of it back within the next few months. This means 66 Bn EGP. The budget deficit forecasted for next year is 180 bn EGP. So all the Mubarak money will plug a third of the deficit for one year,
    Agree that honest business people ought to have nothing to be scared of, however the current free for all score settling environment + lack of clarity on policy direction + some high profile cases like Omar Effendi which contained some precedents that would be scary to any honest businessman (basically, the ruling stipulated that the investor cannot seek international arbitration to achieve a halt on the execution on of the Egyptian court's ruling, contrary to what the original sale agreement stipulated, which effectively amounts to a sovereign default; the foreign bankers that used to buy Egyptian government T-Bills to fund our deficit are not thawra modada, they simply see us as too risky.
    A million egp a month is an absurd salary for anyone, I agree. However you are wrong; the vast majority of highly paid professionals in the Egyptian bureaucracy are making salaries in the range of 10k - 30k egp per month, of that only 1k - 2k come from your taxes with the balance funded by the world bank and different aid funds that try to help attract higher caliber talent to otherwise low paying government jobs.
    No, I do not think Nazif was great (nor was he an economist for that matter). and while we're at it you should prolly know that I have never worked for the government and that I was at the first ever Kefaya protest in December 2004 at darl el qadaa2 (abdel haleem qandil had just been beaten up by Mubarak's thugs and received a hero's welcome), so please don't make assumptions about my motivations.
    Lastly, yes, the Egyptian economy is vastly different than Greece's, however, the looming catastrophe is from the same place; public debt and fiscal deficit. Official government statements put public debt at 88% of GDP. Most estimate of the unfunded ma3ashaat liability (no clear honest to god numbers are out there) would make it in reality 100 - 110% of GDP. By my back of the envelope calculations, a devaluation of the EGP to 6.5 - 7 EGP/USD would add 5% to that. Add to it the incremental increase in next year's deficit (10% of gdp this year vs probably 14% next year) we come up to 119% of GDP.

    I really hope im wrong but the net comparison is this; in 2009 Greece had a debt to GDP ratio of 127% and a budget deficit equal to 15% of GDP. In 2012 Egypt will have a budget deficit of between 109% and 119% and a deficit equal to 14% of GDP.
    I really have no interest in scaring anyone, I just see a grim reality that most of the commentators dismiss as someone else's fault (it is! I totally agree) without recognizing that it is now their problem, the latter being a much more important fact that the former. Happy to hear your thoughts on the matter, especially the way out.

    -idontfeelexposednordoifeelscrewed

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  14. Obviously, Tourism isn't the only plank of the economy but its one of Egypts strong points. Do you think tourists prefer to visit a fear-filled dictatorship or a democracy? My parents visted Tunisia 4yrs ago. They said people were extremely reserved and serious. Now we know why.
    Egypt will be more attractive now, I think except for idiots who prefer fascistoid prison camps.
    Egypt is not Greece, it is not in the EU ( the Greeks were bankrupted by a political, conservative elite ), which means it should be able to produce & export competitively which is what helped Turkey. Not in the EU but proximate. As goodwill ,US&EU should suspend tariffs if only temporarily which
    would boost business & investment; they can
    gradually re-introduce them later if they must.
    Its possible that stolen monies might not be recovered but going forward there should be less
    scope for such abuses. Some of the Gulf states may invest for their own reasons. It makes them look good even though they haven't quite satisfied their own citizens demands.

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  15. Ethiopia would have stopped working on the dam over the summer anyway as it is the rainy season there.

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  16. to : I get paid to analyse economies

    The numbers would seem to lead to a pessimistic analysis but economics is not simply about numbers. Egypts debt & deficit are not greater than some advanced economies.Facts are always grim.
    If there is an economic benefit to the transition to democracy, it will be reduced spending on security & defense and most important a new sense of individual empowerment and responsibility. These can do wonders for a country.Brazil languished under a military dictatorship until recently. Its more than a coincidence that it experienced a boom only after this period ended.
    Your analysis is mostly realistic.Default and devaluation might be necessary. Long term the picture is different, less bleak. Removing Mubarak, was only the first and hardest step.

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  17. To Pirooz: I totally agree. The revolution is the single best thing to happen to the Egyptian economy since the American Civil war in the 1860s (when the US stopped exporting cotton which led to Egyptian cotton prices to skyrocket thus funding the building of modern Egypt)

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