Egypt Needs Economic Reform to Manage Deficit
Total Page：16
File Type：pdf, Size：1020Kb
February 12, 2016 21 Economy Egypt needs Briefs economic reform Economic effect of Syrian war at $35b: to manage deficit World Bank The devastating economic impact Hassan Abdel Zaher the $12.5 billion reported in 2010. of the war in Syria and its spillover The outlook for the tourism sector into nearby countries stands at $35 in 2016 is bleak in the light of con- billion and climbing, the World Bank Cairo tinued flight suspensions by Russia said. and Britain, countries from where The estimate, included in a quar- gypt must carry out pain- more than 3 million tourists used terly World Bank report on the Mid- ful economic reforms in to travel to Egypt every year. dle East and North Africa, was re- order to get a grip on a Egypt’s exports fell by approxi- leased on the same day that world budget deficit that is wid- mately 22% in 2015 compared with leaders in London pledged more ening due to large state the previous year, economists said. than $10 billion through 2020 to Esubsidies, a fall in exports, and a “This is why the reform cannot help the Syrians. dramatic drop in revenues from wait a day,” said Rashad Abdo, head The Syrian war and its effect on tourism and the Suez Canal, econo- of local think-tank the Egyptian Turkey, Lebanon, Jordan, Iraq and mists said. Economics Studies Forum. “There Egypt “have cost close to an esti- The main focus for the govern- is an urgent need for attracting mated $35 billion in output,” the ment in the coming months should investments, raising exports and World Bank said. be to boost revenues and cut above all reducing spending.” All of Syria’s neighbours “are fac- spending to bring the deficit to a Egypt has taken measures to re- ing tremendous budgetary pres- tolerable level and offer services to dress its economic balance by re- sure” because of the conflict, the re- the poor, they said. structuring its subsidy regime. In port said. For instance, the influx of “Reform is actually a matter of 2015, the government reduced fuel more than 630,000 Syrian refugees no choice,” said economist Fakhry subsidies to $7.7 billion, from $9 has cost Jordan more than $2.5 bil- el-Fiki. “Our country is in for an billion in the previous year. In ad- lion a year. economic disaster if it keeps on dition to food and electricity, fuel (Agence France-Presse) moving like it does now.” subsidies make up almost 25% of Egypt’s spending. “Our country is in The government also plans to for an economic make deeper fuel subsidy cuts in disaster if it keeps 2016, partly benefiting from falling international oil prices. Iran supports on moving like it Apparently acting under pres- does now.” sure from the World Bank, from Venezuela’s bid to which it plans to borrow nearly The Central Bank of Egypt’s headquarters in downtown Cairo. Egypt’s budget deficit was about $400 million, the government improve oil $17.2 billion at the end of Novem- raised income taxes and reduced ber and was predicted to reach $30 those on private firms to attract in- on imports. rises. market billion — 11.5% of Egypt’s gross do- vestments. Egypt’s poor, about one-quarter Mahmoud al-Asgalani, founder mestic product (GDP) — by July, the Egypt has to turn to the World of the country’s 90 million people, of the lobby group Citizens against Iranian Oil Minister Bijan end of the current fiscal year. Bank for assistance since its tradi- are likely to be the worst affected. Price Hikes, said, after working Zanganeh said the Islamic republic Egypt bridged the gap between tional Gulf lenders, which lent it up “These measures will inevitably among Egypt’s poor for years, he supports efforts by Venezuela to sta- revenues and spending in recent to $20 billion since June 2013, also reflect negatively on citizens, espe- knows how some government de- bilise global crude markets. years by borrowing from local and face economic difficulties because cially the poor, who are strongly af- cisions translate into financial suf- “The positions of the Islamic Re- foreign sources. The loans, how- of falling oil prices. fected by the slightest of commod- fering for millions of people. public of Iran and Venezuela in the ever, have resulted in public debt The government recently intro- ity price fluctuations,” Fiki said. “This is why I say it is the poor oil sector have always been close,” reaching about $300 billion. duced a measure that aims to cut “This is why the government must who will foot the bill at the end the ministry’s website quoted The country’s foreign currency hundreds of millions of dollars ensure that the reform is not done of the day,” Asqalani said. “True, Zanganeh as saying after he met reserves were $16.5 billion at the from the salaries of Egypt’s 7 mil- at the cost of these poor citizens.” the reforms the government is im- with Venezuelan counterpart Eulo- end of January, down from $36 bil- lion civil servants. Civil servants’ To cushion the effects of the plementing are meant to save the gio Del Pino. lion five years earlier. Most of the salaries consume about 25% of measures on the poor, the govern- economy but millions of people “Iran supports Venezuela’s efforts reserves are owned by other coun- Egypt’s budget. ment sells foodstuffs, including will fail to put food on the table un- to improve the oil market and its sta- tries. The government’s raised tariffs cooking oil, meat, rice and vegeta- til this economy is saved.” bility.” Tourism revenues fell to $6.1 on a range of imports, including bles, at reduced prices. The cam- “We had good discussions on the billion in 2015, according to the household appliances, nuts, cloth- paign is, however, narrow in scope, Hassan Abdel Zaher is a Organisation of the Petroleum Ex- Tourism Ministry, down from $7.5 ing, shoes, pet food and fruit, to leaving the vast majority of Egypt’s Cairo-based contributor to The porting Countries (OPEC), global billion in 2014, and less than half reduce foreign currency spending poor having to cope with the price Arab Weekly. markets for crude oil, and the coop- eration of member and non-member countries,” he added. Del Pino said he had consent from VOIP ban angers Moroccan telecom users several countries for an “emergency meeting” in the wake of world oil price drops. “The current crude Saad Guerraoui VOIP users. the ban angered him. due to a fall in the revenues of start- price is very low, and this price is In a January 15th statement, the “I regularly call my mother in Mo- ups and SMEs. very far from proper prices in inter- Constitutional Union said the move rocco on Viber. Now, with the ban, I “Banning VOIP services is just national markets,” he said. Casablanca “operates against all good techno- have to buy an international phone breaking an entrepreneurial dy- Venezuelan President Nicolas Ma- logical sense” and questioned its card every time I need to call her be- namic,” said Alaoui, adding that pro- duro said that OPEC and other oil- can’t call my family and legality. cause she doesn’t have an ADSL con- viders are tarnishing their image in producing countries were “close” friends in France on Skype This restriction is “an obstacle to nection at home,” said the 48-year- the market.Foreign investors might to an agreement on stabilising the “ with both the 3G and 4G freedom of communication”, the old Moroccan. reconsider investment in such com- market. connections,” fumed Aziz statement said, and harmed many “This is a sheer greed of telecom panies with their communication (Agence France-Presse) Bounou as he drank tea in start-ups, companies and techno- providers who only think about mak- environments restricted. a caféI in Casablanca. “This is outra- logical creators, at a time when en- ing huge profits at the expense of While the move is legal, Moroc- geous and pure greed of telecom op- trepreneurship, especially in new their ‘abused’ customers,” he added. cans protested on social media and erators.” technologies, is a potential pathway Start-ups, small and medium-sized called for a boycott of the telecom Maroc Telecom, Meditel and Inwi, to the creation of thousands of jobs enterprises (SMEs) and contractors providers. the three telecommunication ser- and added value. working with foreign countries are “@meditel @inwi & @Maroc_Tele- Qatar acquires vice providers in Morocco, banned With none of the parties of the ma- likely to be hit the hardest as most com Are now blocking VOIP services from January 1st free calls made jority cabinet criticising the move, of them rely on VOIP services. Con- including Skype. Welcome to 2016 stake in Chevron through mobile internet connec- ANRT’s decision seems to be backed sequently, foreign exchange the year Net Neutrality died in Mo- tions. The ban covers applications by the Islamist-led government. inflows will decrease rocco,” tweeted Hassan Dibani. oil project off such as Skype, Viber, Facebook Mes- Nabil Benabdallah, minister of “On December 17, WhatsApp was senger and WhatsApp. Habitat and leader of the Party of blocked by Brazil, Mark Zuckerberg Morocco Progress and Socialism, told news intervened to unblock the situ- The decision outlet Telquel.ma: “On a strictly ation. I believe that if we man- Qatari state oil company Qatar personal basis, I find that unfortu- age to make our voices heard to Petroleum says it has reached a deal sparked strong nate, but as a party leader, I have not Mark, there will surely be some with Chevron to acquire 30% of its condemnation from studied the issue enough to be able support from him! What do you stake in offshore drilling areas in the opposition to comment.