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Egypt’s PM Sherif Ismail paints bleak picture of economy; vows to fight challenges

Presenting the cabinet's programme to parliament, Sherif Ismail presented a strategy to turn around a gloomy economic and social situation

Gamal Essam El-Din , Sunday 27 Mar 2016
Sherif Ismail
Snapshot from State TV of Egypt’s Prime Minister Sherif Ismail delivering cabinet programme at the Egyptian Parliament House in Cairo, Sunday, 27 March 2016
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Egypt’s Prime Minister Sherif Ismail stated Sunday that Egypt is suffering from a severe economic ‎crisis and that all local institutions should work hard to overcome it.

In a 205-page ‎policy statement before parliament Sunday, Ismail said Egypt has faced harsh political and economic ‎conditions since 2011 and that the time has come to overcome these conditions.‎

“We are facing a battle of life and death and we have to change our style of ‎thinking in order to move forward and to reclaim Egypt’s leading role,” Ismail said.

“The ‎status quo is indefensible and we cannot go back to previous conditions. We all have to ‎live up to the expectations of all Egyptians.”‎

Ismail said Egypt still faces great dangers that pose a threat to its national security, "coming not only from countries around us like Libya, ‎Palestine, Sudan, Iraq, Syria and Yemen, but also from within, in the form of terrorist attacks and ‎extremist thoughts.”

Ismail also reminded MPs that Egypt has one of the highest rates of population growth.

“We increased from 77 ‎million in 2009/2010 to 90 million in December 2015, with an annual runaway growth of population at ‎‎2.6 per cent or eight times more than a country like South Korea and four times more than a country like ‎China,” said Ismail.‎

Worse, added Ismail, the unemployment rate increased from nine per cent in 2009/2010 to 13.3 per cent ‎in 2015/2016, with this problem most severe among young people ranging from 15 to 29 years ‎old.‎

Ismail also indicated that Egypt has experienced an alarming deterioration in public services since 2011.

‎‎“We do not have money or investment to improve these services,” said Ismail.‎

“With high runaway growth in population, Egypt has had one of the slowest rates of economic ‎growth in the last five years. While the population is increasing by more than two million and half ‎each year, economic growth slowed to 4.2 per cent.”

Ismail attributed the economic ‎slowdown to "a severe decline in sovereign revenues coming from national sources like the Suez Canal and ‎tourism.”

On the other hand, said Ismail, “spending on defence services has dramatically increased ‎to meet the needs of Egypt’s national security challenges.”‎

Ismail explained that the rate of inflation has soared to 10-12 per cent, negatively affecting the ‎lives of poor and limited income citizens who spend most of their money on food.‎

Meanwhile, Ismail said the budget deficit hit 11.5 per cent of GDP in 2014/2015 while the interest on ‎public debt surged to 26 per cent of total public expenditure in 2014/2015.

“Since 25 ‎January 2011, or the rise of the revolution against former president Hosni Mubarak, the bill of subsidies ‎increased from LE93.6 billion in 2009/2010 to LE188 billion in 2013/2014,” said Ismail, adding that “Right ‎now, around 75 per cent of budgetary allocations are directed to spending on salaries and subsidies, ‎with only 25 per cent left for spending on infrastructure and public services.”‎

Ismail also indicated that foreign debt rose from $33.7 billion in June 2010 to ‎‎$48.291 billion at the end of January 2016.‎

Continuing his bleak assessment of the state of the national economy, Sherif referred to the negative ‎impact of the Russian airliner crash in Sinai last October, saying that it led to a severe decline ‎in the country’s foreign exchange revenues.

“Tourism revenues declined from $10.6 billion in ‎‎2010/2011 to $7.4 billion in 2014/2015,” said Ismail. Worse, Ismail said the bill of commodity imports ‎surged to $61 billion in 2014/2015 while exports markedly dropped from $27 billion in 2010 to $22 billion ‎in 2014.‎

Ismail also lamented low competitiveness of the Egyptian economy and the negative impact of international ‎economic slowdown on the country.

In order to counter these negative developments and get the country out of its economic crisis, ‎Ismail said his government has developed a two-year economic reform programme.

“This is a ‎programme that is supposed to end in June,2018 and we hope in collaboration with parliament to ‎implement it, with some changes expected in this programme in accordance with developments,” said ‎Ismail.‎

Ismail said his government’s programme focused on several points, including safeguarding national security, ‎reinforcing democratic infrastructure, implementing an economic reform programme, achieving social ‎justice, and improving infrastructure and sectoral development. The programme also ‎entails administrative reform, in terms of securing greater transparency and ‎fighting corruption, and enhancing Egypt’s role in the Arab, African and international spheres.

Ismail said his government would continue its preventive war against terrorist organisations and ‎their sources.

“We will step up cooperation with Al-Ahzar to reform religious discourse to ‎reflect the tolerant values of Islam,” said Ismail, adding that “The government will also do its best ‎streamline police and military forces in light of the dangers coming from countries like Libya, Syria, Yemen ‎and Iraq.‎"

In terms of democratic reform, Ismail said his government respects the ideals of the two revolutions of 25 ‎January 2011 and 30 June 2013 of turning Egypt into a democratic state based on respect of ‎human rights and the rule of law.

To achieve these ideals, Ismail said his government will help establish ‎a vibrant civil society, grant greater freedoms to political parties, and issue new media laws in ‎line with the new constitution.‎

Ismail also disclosed that the government work hard to ensure that local council elections are ‎held in 2017, to complete the democratic transition process. ‎

Parliament speaker Ali Abdel-Al announced that Ismail’s policy statement will be reviewed by a ‎committee headed by deputy speaker Al-Sayed Al-Sherif and representatives of most political forces ‎in parliament.

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