40% of population live close to poverty line

Sisi's greatest task will be rebuilding Egypt economy

GMT 14:06 2014 Tuesday ,20 May

Arab Today, arab today Sisi's greatest task will be rebuilding Egypt economy

An Egyptian woman walks past a homeless man sleeping on a sidewalk in Cairo
Cairo - Arab Today

An Egyptian woman walks past a homeless man sleeping on a sidewalk in Cairo Egypt's former military chief Abdel Fattah al-Sisi is expected to romp home in this month's presidential election, but his challenge will be fighting poverty and rebuilding the shattered economy. More than three years after millions of Egyptians demanding "bread, freedom and social justice" ousted strongman Hosni Mubarak, and later his successor Mohamed Morsi, nearly 40 percent of the population -- some 34 million people -- live close to the poverty line.
Sisi should easily trounce his sole rival, leftist leader Hamdeen Sabbahi, in the May 26-27 election, to inherit an economy roiled by nearly 12 percent inflation, unemployment of 13 percent, falling investment and sliding tourism revenues.
Expectations from Sisi are high after he ousted Morsi last July following massive street protests demanding the Islamist's resignation.
Morsi, Egypt's first freely elected leader, was accused of ruining a dilapidated economy already hard hit since the 2011 revolt ended three decades of corruption-marred Mubarak rule.
Sisi, who has emerged as a nationalist icon in the mould of the country's revolutionary military ruler, Gamal Abdel Nasser, has called for "strengthening the role of the state which must monitor and remain engaged in the organisation and implementation of projects".
"He clearly sees a role for the army and state institutions in the economy which some businessmen consider as competition," said Mustapha Kamel al-Sayyid, professor of political science at Cairo University.
"For Mr Sisi, fighting poverty means depriving the Muslim Brotherhood of its popular support as it provides the poor with social services."
Sisi has warned the private sector that if he is elected the state would intervene to form a "mechanism" for controlling prices of some products to ensure the private sector "reduces its profit margins".
He said he aims to create new markets by providing low-cost products.
Strengthening state control worries many businessmen who spoke to AFP on condition of anonymity, despite saying Sisi offered guarantees to protect their interests.
- 'End subsidies' -
In an interview with a state-run newspaper, Sisi urged businessmen to "set up an account for funding projects", insisting "everyone must" contribute.
Such a fund could raise up to 100 billion Egyptian pounds (about $14 billion, 10 billion euros).
Egypt's internal debt is estimated at about $236 billion, or 85 percent of gross domestic product, while the budget deficit is 13 percent of GDP.
The state spends nearly 30 percent of its budget on costly subsidies for bread and energy.
"The only way to cut the huge budget deficit is to end government subsidies on energy supplies to the private sector as it is industry's responsibility to bear the cost," said Sayyid.
Interim premier Ibrahim Mahlab has said that subsidies on oil cost the exchequer $22 billion, against an annual education and health budget of $9.8 billion.
A key concern for Egyptians is near daily power cuts triggered by the government's inability to buy fuel given its falling foreign reserves, rising population and low power generation.
Foreign exchange reserves have halved since 2011 to $17 billion in April, despite receiving almost $13 billion from Gulf allies in aid since Morsi's ouster.
External debt has risen to $45 billion as of December, while tourism minister Hisham Zazou told AFP revenues from tourism which employs more than four million people slipped to $5.8 billion in 2013 from $12.5 billion in 2010.
Foreign direct investments have also dried up, official estimates show. Before Mubarak's overthrow they stood at $12 billion but have since fallen to about $2 billion annually.
Sisi has expressed "confidence in the continuation of local and foreign investment and aid from Arab countries" to fund new projects that would help start a recovery.
The interim government has begun implementing plans to cut the budget deficit to 5.6 percent by 2017, led by new tax plans and reduced energy subsidies.
It is working on a proposal to widen the tax base and levy a five percent tax for three years on those with an annual income of more than a million Egyptian pounds, the finance ministry says.
Source: AFP

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