From: Inside Story

What does the future hold for Egypt?

As the country’s reserves fall and unemployment increases, we ask if it is tipping towards an economic breaking point.

Two years after the ousting of Hosni Mubarak, Egypt’s new learders are struggling to manage the hopes of 84 million people, and at the same time an economy dependent on aid and favours, and hooked on state subsidies.

Egypt is surviving hand to mouth – it is running out of cash, and struggling to pay for imports of oil, wheat and other basics commodities.

“People can feel the inflation, specifically that Egyptian pound has depreciated significantly, and there is a new black market emerging … and people have witnessed this inflation in their daily products that they’ve been buying such as milk, bread – over 30 percent in some commodities and over 300 percent in some other commodities. So it’s hit and it’s hit hard a lot of people who are already suffering and struggling to make ends meet.

– Ahmen Naguib, a member of the Egyptian current party

This is raising fears of a broader backlash, as the new leaders battle with political and civil unrest.

Egypt’s currency reserves have fallen to less than $14bn from around $36bn before the revolution. Unemployment has jumped from a steady 9 percent in the years before the uprising, to 13 percent now.

Revenue from tourism dropped by more than a third in the year after the revolution – down from more than $13bn to less than $9bn. And nine months into the office, President Mohamed Morsi is resisting a $4.8bn loan from the International Monetary Fund (IMF) stalling over how much Egypt would have to raise taxes and cut massive state subsidies to get it.

The prospect of fuel and food shortages is set against a background of continued unrest and political protests.

On March 31, supporters and opponents of President Morsi set against each other – throwing stones and petrol bombs. The opposition have rallied against what they see as Morsi’s dictatorial style, meanwhile the government claims the opposition is not respecting democracy. 

So, what does the future hold for Egypt? Can it continue to look to world powers to keep it from economic chaos? And will this add to civil and political unrest? 

To discuss this, Inside Story, with presenter Hazem Sika, is joined by guests: Ahmed Naguib  a member of the Egyptian Current party, and co-founder of the Council of Trustees of the Revolution in Egypt ; Mohammad Elmasry, a professor of Media Studies at the American University in Cairo ; and Angus Blair, founder and president of the Signet Institute, which provides advice on business and politics in the Middle East and North Africa.

“The military left President Morsi and this current regime in a very difficult situation – when they took over power in February 2011 we had $36bn in reserves and it went down to about $14bn at the time of the presidential elections.

“So the economy was essentially in shambles … but I think they’ve been trying to do the best that they can do. I mean just a couple of weeks ago, President Morsi secured some trade agreements with both Pakistan and India, he had previously secured agreements with Turkey, and other countries, he has been travelling around trying to get as much funds as he possibly can, he got $5bn from Qatar alone [and] he is working on the IMF loan.

“I think at the end of the day though  the big problem is and it’s no secret , the lack of stability, the chaos that’s unfolding in the streets … and the things that we are seeing unfold in the streets right now are not going to encourage tourism, they are not going to encourage investors …

Mohammad Elmasry, professor of Media Studies at the American Univesity in Cairo