Unprecedented Egyptian Economic Successes Attained under President Al Sisi
Photo: President Al-Sisi at the inauguration of the Egyptian Petroleum Refining Company in Mostorod
by Ayman Walash, Counselor - Head of the Press & Information Office, Embassy of the Arab Republic of Egypt in Pretoria, South Africa
11 November 2020
Throughout its history, Egypt has witnessed various challenges and conflicts that have, more or less, contributed in undermining the development process and has also been very keen on overcoming them to cope with the regional and international changes taking advantage of its unique geographic location which has played a pivotal role in the process of development. Perhaps, what Egypt experienced in 2011 is the most striking evidence on that; after the economic problems were stockpiled, a new vision emerged to put a decisive end for these problems as of 2013. This is in addition to the economic reform programs, which are completely different from the previous ones, these programs were focused on tackling the root causes of the problems and threats besides working on realizing the future with all its tools.
Under H.E. President Al Sisi, Egypt, aided by the will and sacrifices of its great people, has managed, for the first time in its history to divert its expenditure, which had primarily been a consumption expenditure to a productive expenditure in order to build and develop the entire infrastructure of the country as a whole (i.e. the construction of roads and bridges, the reclamation of hundreds of thousands of acres, the provision of housing units for the poor and middle-income, the establishment of a new capital, the development of factories, the reconstruction of the slums…). Egypt resumes the inauguration of giant production projects in all the Egyptian governorates. This is in addition to resuming the transformation programs into a digital government in a manner that is indicative of a modern country by all standards so that it could confront the domestic and international challenges.
Out of its keenness on upgrading the national economy and the living conditions of the citizens, Egypt has performed an economic reform program since 2017 which targeted achieving social justice and properly directing the state subsidy to those who deserve it among the neediest classes. The reports issued by the IMF indicated a noticeable improvement of the economic conditions in Egypt since the beginning of the economic reform program; the fact that assisted in the liberalization of the exchange rate, accelerating the growth rates, decreasing the foreign and financial deficit, increasing foreign exchange reserves whereas the unemployment rate decreased to 8.3% and the inflation is expected to reach it lowest levels ever by the end of the fiscal year 2020/2021 compared to 2011 and guidelines of the concerned international institutions.
There is no doubt that the outbreak of the Covid-19 pandemic has an impact on the world economies. However, despite the pressures that all the national projects put on the resources of the country, the international economic institutions have all stated that, among a very few number of countries, Egypt succeeded in achieving a positive growth rate during the pandemic. Moreover, the challenge that faced the government on how to balance between the continuation of the development process and absorbing the challenges that emerged against the backdrop of the crisis. The Egyptian government allotted huge sums of money from the state budget to develop the health and education sectors as well as providing financial subsidies for the per diem employees and the most affected households. The report issued in September 2020 by Moody’s on the credit ratings praised the creditworthiness indices of Egypt. It also rated Egypt at B2 with a stable outlook. The report stated that raising the rating is related to the state debit sustainability, its reduction of the general financing needs and its preservation of high levels of foreign exchange reserves. Goldman Sachs Bank affirmed the ability of the Egyptian economy to survive the economic repercussions of Covid-19 pandemic pointing out that about 50% of the indirect foreign investments, which exited on the onset of Covid-19 pandemic, returned back. It also released positive outlook until the end of this year with regard to the inflation rates and the strong performance of the Egyptian pound. In addition, some touristic inflows were achieved despite the Covid-19 pandemic as Wizz Air, which is regarded the third biggest low-cost airline in Europe, announced that it would operate three weekly flights on the route Milano-Alexandria and Royal Dutch Airways (KLM) resumed its flights to Cairo after a three-year suspension. This is in addition to the resumption of the flights from Russia and Kazakhstan to Egypt as the government has put all the precautious measures agreed upon to receive tourists into effect.
The Egyptian government has focused in the recent years on handling the shortcomings of the Egyptian economy and social problems resulting from them. It managed to achieve a decrease of the annual deficit rate for the overall country in August 2020 to be 3.4% against 4.6% in July 2020 and 6.7% for the same month last year. This is owing to the continuous prices decrease of the food, drinks, grains and other food products group.
The government attempts, for the first time in the history of Egypt, to provide an accurate digital register for the real estate, agricultural lands in order to assist solve the problem of the eroding agricultural lands and lessen the utilities crisis which was created when the 2011 Revolution was exploited in the random expansion of building in the agricultural lands.
On the other hand, the Egyptian state has declared its imminent target, which is to increase government investments for the current financial year 2020/2021 by 55% compared to the past year, so that the total government investment would be 280 billion EGP (225 billion EGP financed from the state’s public budget). Ten percent of these investments are to be directed to projects of clean water and the sewage disposal grids.
One of the biggest successes is probably the emergence of the East Mediterranean Gas Forum as a regional entity for natural gas that incorporates the neighboring countries as members, and developing the forum into a global being upholding the ambitions of the nations and states.
Accordingly, it became clear that there was an urgent need to work on the investment in gigantic infrastructure projects of the government, especially in connection to the sector of building and structuring. Such investments were the locomotive of the Egyptian economy’s train of development during the Covid-19 pandemic. They massively helped in achieving a positive rate of development estimated at 3.5% in the financial year 2019/2020. They also helped curbing the accelerated rate of unemployment in correlation with the setback suffered by the private sector investments due to the pandemic (the unemployment rate slightly moved up in the second quarter of 2020 to 9.6% compared to about 7.7% in the first quarter, with 2.1% increase than the same quarter of 2019). Moreover, the expenditure within these projects contributed to pumping funds into the markets to revitalize the various economic activities and keep them going.
Socially, President Al-Sisi has been focusing his attention since his re-election in 2018 on the investment in the Egyptian human being. Such interest has been interpreted on the ground when the state harnessed its capabilities and put them in service of the sectors of health and education. The electoral agenda of the President during his current term of office is based on those two sectors. In addition, the considerable capabilities of the Engineering Authority of the Armed forces were brought on board for the national schemes, to take advantage of its huge expertise, especially to finalize these projects on time at the very least costs possible, in collaboration with the private sector and in a manner that adds job opportunities and expertise for the Egyptian young peoples.
We cannot also overlook the attempts of some anti-Egyptian countries and streams to criticize the Egyptian state for the role played by the military establishment in the civil life, as these are void allegations. The military establishment is basically a disciplined achievement-oriented bureaucracy-free national institution. Many countries succeeded in capitalizing on the potentials of their military establishments for economic resurrection. The Chinese model is probably the best example. Moreover, the institutions operate as private companies governed by the rules and regulations of the market.
Last but not least, the Egyptian history, both ancient and contemporary, had established the fact that the power of the all-encompassing Egyptian state (economically – militarily- socially) is always targeted in order to wear it down and discourage the efforts of restoring the Egyptian regional and international influence. Egypt has been the target for vindictive non-military campaigns since the start of the 21st century and particularly since 2011, Egypt became accustomed to the vicious media campaigns sponsored by its antagonists among the countries. Such campaigns attempt to tarnish the progress and prosperity of the Egyptian state and the Egyptian peoples’ unity with their leadership, whether via the foreign media or the social media, which has turned into an instrument to influence public opinion of political orientations in favor of one party against the other, with the final aim of creating a negative mental image of Egypt in the head of the Egyptian citizen and the international community. Consequently, the movement of the Egyptian government will be restricted and exhausted in endless trials to correct any allegation that may affect the real situation on the Egyptian domestic scene.
Despite all the challenges and hardships, and against all the attempts of destruction, sabotage and instigation by terrorist powers, organizations, governments and entities to obstruct the journey of the Egyptian state on the path of developing, building and refining the life of the citizens, the providence that safeguarded the land of Egypt along history as Allah the Creator pledged safety namely to Egypt in his holy books, in addition to the wisdom of the political leadership and the awareness of the Egyptian people, will rise as an impenetrable wall to ward off the powers of evil and darkness and Egypt and its people will always survive, stand tall and live in harmony against the wicked plots of its ill-wishers.