Ten economic milestones in Egypt's revolutionary year

Ahram Online, Tuesday 24 Jan 2012

Pipeline explosions, three finance ministers, contentious IMF talks - just some of the drama Egypt's economy has seen over the last 12 months. Ahram Online picks the highlights

Money and the revolution
Protester in Tahrir Square with money on his mind (Photo: Mai Shaheen)

1) Egypt's stock exchange is suspended: 28 January

Stock exchange

With anti-Mubarak protests raging and shares plummeting in value, Bourse authorities made the decision to keep Egypt's stock exchange shut after the two-day weekend. The market remained closed for eight weeks, finally reopening amid much fanfare on 23 March with new measures to halt trade if stock values plunged. 
The benchmark EGX30 dived to an 18-month low on reopening and has been steadily declining ever since, with fresh outbreaks of street violence prompting further dips. The main index has tumbled 40 per cent since 25 January 2011. 
2) Egyptian banks are forced to close: 30 January
Egyptian banks
With police forces withdrawn from the streets, Egypt's banks feared for the worst and opted to close their doors. Coming at the end of the month, when employees normally receive their salaries, it meant Egyptians were unable to access much-needed funds.
Banks reopened on 7 February amid worries Egyptians would descend en masse to withdraw their savings -- a fear that did not materialise.
3) Gas pipeline to Israel bombed: 5 February
Israel pipeline
While protests raged in Egypt's cities, saboteurs in North Sinai struck the pipeline supplying natural gas to Israel and Jordan. The assailants, who remain unknown, have struck nine more times, most recently on 18 December.
During Mubarak's reign, Israel received Egyptian natural gas at reduced rates and the ousted president now faces charges of personally profiting from the sales. Egyptian officials have said they are renegotiating the price of gas exports with both Israel and Jordan but so far no agreements have been signed.
4) Omar Effendi is renationalised: 7 May
Omar Effendi
A landmark verdict from a Cairo administrative court overturned the controversial sale of the iconic department store to a Saudi buyer -- a ruling that sparked a wave of court actions that resulted in three more Egyptian firms being renationalised. 
The 2006 sale of the Bank of Alexandria and six other renationalisation cases are now under review in court. Over 300 companies were privatised in the last two decades. The legal battles have resounded with disgruntled workers at formerly state-owned firms who have added a new demand to their demonstrations: a plea their employers be returned to the public sector.
5) New minimum wage announced: 1 June
Wage demands
The interim government approved a new monthly minimum wage of LE700 (US$120) for the public sector starting from July 2011, in a partial move towards social equality. 
Private sector workers, however, saw no such agreement, only the promise of an "emergency allowance" in 2012 for those earning less than LE700. 
6) Egypt's ruling military rejects IMF loan: 25 June
Struggling to balance its budget, Egypt's interim government started the summer apparently ready to accept a $3.2 billion loan from the International Monetary Fund (IMF).
But then the Supreme Council of the Armed Forces (SCAF) vetoed the move, saying it had decided "not to burden" any future government with repayment obligations. Just six months later, with foreign currency reserves falling under $20 billion, there was an apparent change of heart. In January, the IMF returned to Cairo to resume discussions but not everyone is happy. 
7) Military rulers approves new budget, with severe cuts: 4 July
Tantawi and Sharaf
Under pressure from the SCAF, the interim government had to cancel a 2011-12 plan for LE40 billion in public investments to avoid a wide deficit, sacrificing a targeted growth rate of 3 per cent.
The budget was passed by the military council without parliamentary discussion and saw other expenditures slashed by LE27.3 billion, affecting planned unemployment benefits and pensions. A few days after the budget took effect, a sit-in on Tahrir Square helped force a cabinet reshuffle and the removal of minister of finance Samir Radwan.
8) Hazem El-Beblawi becomes Egypt's first post-Mubarak finance minister: 16 July
Hazem El-Beblawi
An economist with international teaching experience, El-Beblawi replaced Samir Radwan who was appointed by Mubarak in the final days of his presidency. El-Beblawi said imposing a maximum wage was his top priority but he left office in late November with his dream unfulfilled. 
During his five months in office, he oversaw a new austerity budget and campaigned to reopen IMF negotiations to secure a loan with which to bridge the deficit. In December, Momtaz Said became 2011's third finance minister.
9) Central bank raises interest rate for first time in two years: 24 November
Central Bank
Egypt's interest rate, stable since 2009, saw a 1 per cent hike as the central bank struggled to ease pressure on the country's currency following fears of political instability amid a fatal security crackdown on protesters near Cairo's interior ministry.
The central bank raised deposit and lending interest rates to avoid an increase in bank withdrawals and dollarisation.
10) International reserves halved: 6 January 2012
Shrinking dollars
Egypt has shed $18 billion in foreign currency reserves since the beginning of the revolution, the central bank announced just before the uprising's first anniversary. When protests first broke out, reserves were around $36 billion.
The central bank caused the quick depletion by pumping in dollars to defend the Egyptian pound after foreign treasury bill holders, worried by prolonged political instability, sold off assets and repatriated their funds. 
(Photos courtesy of AP and Reuters)
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