The promising indicators of the International Monetary Fund regarding growth in Egypt impose legitimate questions about the reality of this growth in a country whose people suffer from unemployment, the increase in poverty rates, and the decline in the value of the local currency, all of which have increased in intensity with the circumstances and repercussions of the Coronavirus pandemic in recent months.
In its annual report on the growth prospects of the global economy, the Fund indicated that Egypt is the only country in the Arab region that will survive the current year’s recession, as its economy will grow by 3.55%.
The positive indicators come from the international partner of the Egyptian government in the economic reform programs, despite the assurances of the Fund itself early this month – through its website – the slowdown in the pace of economic activity in Egypt under the influence of the Corona crisis.
Corona’s challenges pushed the rise in unemployment rates in Egypt to 9.6% in the second quarter of 2020 compared to 7.7% in the previous quarter – according to the Central Agency for Public Mobilization and Statistics (government) – which was reinforced by the decline in the numbers of labor flowing to the Gulf markets, as well as the intention of many of them to return. As a result of difficulties such as reducing the number of workers or salaries and being forced to return.
Last June, Minister of Planning Hala Al-Saeed revealed that 4.4 million people working in the formal and informal private sector lost their jobs due to Corona, and the data of high growth rates in Egypt coincided with reducing the budget deficit and achieving primary surpluses, before the pace of economic activity shrank with Take social distancing measures.
The contraction of the Egyptian economy
The Egyptian academic, Hossam El Shazly, a visiting professor of change management and strategic planning at the University of Cambridge, in Britain, emphasized the necessity of looking at the international reports related to the expected growth rates in Egypt, especially the reports of the International Monetary Fund, with the overall view of the report, and not only by focusing on growth rates.
In statements to Al-Jazeera Net, Al-Shazly indicated that the growth rates issued by the fund are determined by factors that may mainly control the renewal of loans and the rate of pumping long-term loans into the state budget, and their impact on the general budget.
And recently, a World Bank report showed that Egypt was the largest borrower in the Middle East and North Africa region during 2019, accounting for nearly 34% of the region’s total debt.
The foreign debt ratio rose – according to government data – to about $ 123.5 billion at the end of last June, registering an increase of about $ 80.26 billion over June 2013, when it reached about $ 43.2 billion at that time.
El-Shazly warned that the cost of astronomical loans is the life of the Egyptian citizen, in addition to the involvement of future generations in bearing long-term debts, the consequences of which will not be borne by the current governments.
He explained that the economic restructuring programs in Egypt that the “International Monetary” reports describe as stable were mainly based on submission to the Fund’s extremist decisions regarding the lifting of subsidies on fuels and basic commodities and the floating of the pound (which has lost more than twice its value since the decision to float in 2016 against the dollar that It is priced at 15.70 pounds) and other decisions.
He added that these reports always focus on the macro-economy directed at the international community with complete disregard for the micro-economy that directly affects the standard of life of the citizen, and therefore we find the Fund’s reports always refer to macroeconomic stability and the economic model associated with it in the period between 2016 to 2019.
The Egyptian academic described the economic strategy of the system in Egypt as a “toxic economy system” that is structured to send deceptive messages to the international community based on the focus on macroeconomics and the application of the winning strategy regardless of the cost, even if the cost of astronomical loans is the life of the citizen.
Al-Shazly believes that the Fund’s loans are internationally distinguished with a notorious history due to its unfair conditions that leave a devastating impact on the quality of life and the livelihood of the citizen, in exchange for setting long-term development plans that require the existence of ruling dictatorial systems that cannot be opposed or stopped by their decisions, indicating that the loan system Put a significant percentage of Egyptians below the poverty line.
Poverty rates in Egypt rose to 32.5% of the total population – which exceeded 100 million people in 2018 – after it was 28% in 2015 – according to government reports – meaning that a third of Egyptians are below the poverty line, with an increase of 5 million citizens in just 3 years.
He warned that the rates of low unemployment rates referred to by the Fund “are clearly affected by the mega and non-productive projects such as the Administrative Capital, the construction of bridges and others, which are employed to reduce the current unemployment rates, while the majority of these projects do not leave any impact on raising the citizen’s standard of life, nor Basic services related to health, education and food. “
He also pointed out that the IMF report clearly indicated that the world’s failure to recover from the Corona pandemic, and the collapse of the tourism sector in Egypt may lead to the need for more loans, an increase in public debt, and an increase in poverty and unemployment rates in Egypt.
He continued, “In this context, we cannot close our eyes to the political cards used by some of the parties supporting the ruling regime in Egypt, which have an influential hand within the International Monetary Fund.”
On the other hand, Egyptian economist Abdul Nabi Abdul Muttalib considered the international monetary indicators regarding growth in Egypt good, adding, “However, their repercussions on the citizen will not be apparent.”
And on the relationship of the international monetary figures to the citizen’s status in relation to unemployment and poverty rates, the state of the local currency and prices, Abdel-Muttalib said in statements to Al-Jazeera Net, that “the problem of the Egyptian economy lies in its need for growth rates of more than 7% annually and in a sustainable manner.”
He added that “these indicators will very much keep the Egyptian economy away from the shocks that may be exposed to as a result of global developments due to Corona,” ruling out that the IMF’s view of growth in Egypt is “deceptive”, given that it is a “credible international institution, and has advanced models for measurement and forecasting,” And reaching those expectations based on documented scientific studies and analyzes.
He pointed out that the Fund’s expectations of a positive growth rate decline in Egypt from 6% to 3.5%, despite its expectations of a decline in growth rates in most countries of the world, members of the Fund, due to the impact of many sectors within the Egyptian economy with the Corona virus, like the rest of the world, where tourism revenues have decreased. The number of tourists decreased.