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AL-SISI’S Economic Gamble

American_Jihad

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I'm glad Al-Sisi took out Obama's Morsi...

AL-SISI’S ECONOMIC GAMBLE
He needs to defeat the Islamist terrorists, while liberalizing the Egyptian economy.
August 21, 2017

Joseph Puder
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Egypt’s President Abdel Fattah Al-Sisi is taking a huge gamble in his attempt to revive the failing Egyptian economy. He is doing something his predecessors, Anwar Sadat and Hosni Mubarak, did not succeed in implementing, due to violent public demonstrations, or worse, a revolution that ultimately forced Mubarak out of office. Al-Sisi is applying shock therapy in a country whose GDP per capita income in 2017 is estimated by Global Finance Magazine to be $12,597.7, and whose unemployment rate, according to the International Monetary Fund (IMF) world economic outlook for 2017 is 12.3%, slightly less than the previous year (12.7%). The same source estimated the inflation rate at 18.2%, (annual inflation rate according to the Wall Street Journal is over 30%) and the public debt at 93.4%. Standard & Poor’s Egyptian Government Bonds rating is B-; Moody’s rating is B3. With these stark figures, Al-Sisi is cutting food and fuel subsidies. Fuel prices went up 50% in June and cooking gas prices doubled.

Al-Sisi sought and received a $12 billion IMF loan to offset the budget deficit. To acquire the loan, the Egyptian government was obligated to cut food and fuel subsidies and devalue the Egyptian pound. This is likely to push inflation rates higher. In the meantime, tens of millions of ordinary Egyptians rely on state subsidized bread. In January, 1977, Egyptian bread riots erupted after President Anwar Sadat ended subsidies of basic foods, especially bread. Hundreds of thousands of poor Egyptians took to the streets, with 800 people being killed and hundreds injured. The Government abruptly cancelled the harsh economic measures as a result of the deadly riots. Sadat attempted to liberalize the Egyptian economy, much like Al-Sisi is doing now. Thirty years later, in 2007 and 2008, food prices soared once again and food riots unfolded, resulting in more deaths.

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AL-SISI’S ECONOMIC GAMBLE
 

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