With the focus of the coup government in Egypt on dispersing protesters from the squares and streets of Cairo, it has spent very little time on doing something about the crumbling Egyptian economy. Analysts believe that it has been “close to death” ever since the ousting of President Mohamed Morsi by the coup at the beginning of July. “Severe price hikes across the board have led to a sharp rise in inflation,” they say in agreement with numerous international reports. Egypt’s credit rating has, as a result, been downgraded.
Experts in Egypt, meanwhile, say that the economy is failing despite “assurances” of stability from the coup government and its “justifications” for the current situation. Although the Egyptian Investment Bank now expects a continuous rise in inflation in Egypt during the current fiscal year 2013-2014, previous predictions were for a stable economy and prices after the post-coup injection of financial aid from Gulf States.
The investment bank also predicts a rise in the national debt, saying that it might reach $50 billion. Its report noted that the annual inflation rate might range between 12 to 13 per cent, compared with 10.9 per cent last August. July’s inflation rate was up 0.9 per cent on June, at 11.5 per cent; this was put down to increased demand during the month of Ramadan and price increases of 8.9 per cent.
Nevertheless, such a gloomy economic outlook has not deterred the coup government from largely ignoring the economy and overspending time and money on the security sector. The result is that thousands of factories, large and small, have closed across Egypt. One investor in manufacturing put the figure at 5,000, “as a result of the imbalance in government policy which sees ministers doing nothing but spend more on security.”