Kamran Stu
MPA (400+ posts)
Egypt’s Economy Isn’t Booming, It’s Collapsing.
Yehia Hamed
One year after Egypt repositioned itself as a “global investment destination,” financial commentators have taken to calling it the world’s hottest emerging market. Investors are flooding into the country in the hope of making a fortune in Egypt’s capital markets; in December 2018 foreign holdings of local debt were up more than 20 percent on the previous year, with this trend set to continue in 2019. One investment bank called Egypt’s apparent recovery the “most attractive reform story” in the Middle East, Africa, and Eastern Europe.
But all this obscures a darker reality. In a report published by the World Bank in April 2019, it was calculated that “some 60% of Egypt’s population is either poor or vulnerable.” Overall living conditions, meanwhile, are sliding rapidly. How can it be, then, that Egypt’s economic outlook appears to be so rosy?
A grand deception lies at the heart of Egypt’s miraculous economic recovery, and its architects are the government of General-turned-President Abdel Fattah al-Sisi and the International Monetary Fund.
Source
Yehia Hamed
One year after Egypt repositioned itself as a “global investment destination,” financial commentators have taken to calling it the world’s hottest emerging market. Investors are flooding into the country in the hope of making a fortune in Egypt’s capital markets; in December 2018 foreign holdings of local debt were up more than 20 percent on the previous year, with this trend set to continue in 2019. One investment bank called Egypt’s apparent recovery the “most attractive reform story” in the Middle East, Africa, and Eastern Europe.
But all this obscures a darker reality. In a report published by the World Bank in April 2019, it was calculated that “some 60% of Egypt’s population is either poor or vulnerable.” Overall living conditions, meanwhile, are sliding rapidly. How can it be, then, that Egypt’s economic outlook appears to be so rosy?
A grand deception lies at the heart of Egypt’s miraculous economic recovery, and its architects are the government of General-turned-President Abdel Fattah al-Sisi and the International Monetary Fund.
The government’s chronic mismanagement of public finances and overall negligence has caused external debt to risenearly fivefold, due to depreciation of the Egyptian pound, in the past five years and public debt to more than double—and this is expected to continue for the foreseeable future.
The government currently allocates 38 percent of its entire budget merely to pay off the interest on its outstanding debt. Add loans and installments, and more than 58 percent is eaten up.
Source
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