The forces behind the counter-revolution succeeded in straining the economy during President Morsi’s time in office. They did this by creating numerous crises branching out into various domains, such as increasing the cost of everyday transport operations and raising the prices of consumer goods. There was also the severe shortage in electricity that magically disappeared right after the coup, despite the fact that the same Minister of Electricity has remained in office. Although these crises helped the coup to succeed, the true intentions of the coup have remained clear. And more importantly, the worsening Egyptian economy has now fallen victim to the coup that toppled legitimacy.
While straining the economy was the main crutch that aided the coup’s forces in implementing their bloody plan, it will also inevitably be the reason for their downfall.
By simply reading the economic reports and comparing the current plan to alleviate the economic crisis with Morsi’s plan, it becomes evident that Morsi’s era provided a promising beginning for both regional and international economic projects. The first of these projects would have been the regional development of the Suez Canal. Many international parties had already expressed interest in investing in the project and it was projected that it would provide the Egyptian economy with around 100 billion dollars a year. The project was fully halted in the wake of the military coup and the parties responsible for its implementation have said that Israel, the United Arab Emirates, and other regional countries are the ones preventing the realisation of this project, primarily because it directly affects them.
In terms of the international investments during Morsi’s rule, Egypt was expected to receive over 100 billion dollars in support for developmental projects in the country. However, all plans to receive potential foreign investments have ended in the wake of the coup. Before the revolution the regime deliberately ignored foreign investments and expressed that they wanted to focus solely on Arab investments.
The economic crisis comes at a time when there is an increasing gap between wants and actual expenses. This is the main cause of the increasing budget deficit, which is expected to exceed more than 250 billion Egyptian pounds due to the Ministry of Finance’s direct role in drowning the state in a sea of regional debts. The Ministry’s first mistake was to borrow 200 billion pounds worth of bonds and bills from local banks.
The tourism sector has been suffering the most throughout this economic crisis. It finally began to gain momentum at the beginning of 2013 and was increasing at a rate of ten per cent. In fact, Egypt was welcoming more Arab and international delegations and touristic groups. However due to the bloodshed caused by the conspirators of the coup, many countries are now telling their citizens to avoid traveling to Egypt. Tourism in Egypt is among the major sectors of the economy and it is essential to the economic prosperity of the state.
When it comes to increases in the price of consumer goods and especially food, it is important to note that prices increased during President Morsi’s presidency due to the orchestrated fuel shortages. However, since the military coup, food prices (especially meat and vegetables) have doubled while the military has not provided any justification as to why this is nor have they even attempted to address this issue.
Egyptian trade and exports had increased exponentially during President Morsi’s time in office. A large number of Egyptian products were exported abroad as a result of the 25th January revolution. The military coup has halted all progress in trade, and due to the worsening security situation many countries have decided to cut ties with Egypt because they believe that putting sanctions on Egypt will bring an end to the bloodshed in the near future.
External debt is among the many problems facing Egypt. Various international institutions expected Egypt’s debt to exceed fifty billion dollars due to the high cost of debt insurance, which reportedly reached a record high on Thursday.
According to the Social Market Foundation, the cost of insuring Egypt’s debt for five years has increased from thirty basis points to eight hundred basis points, which is the highest rate recorded over the last six weeks.
Although the Egyptian stock market often goes against the tide, the events of the 3rd July coup have had a negative effect on the Egyptian stock exchange. According to recent reports, the stock exchange recently suffered losses exceeding 50 billion Egyptian pounds.
Loaf of bread:
As one of the basic essentials of survival in an ordinary Egyptian’s home, the price of a loaf of bread has always provided a good indication for the general state of the Egyptian economy under the worst of conditions. Former Minster Bassem Ouda succeeded in ending subsidised flower smuggling, bringing an end to the bread crisis that resulted from excess wheat production and the disorganised distribution of local wheat resources. Ouda’s bread initiative was a rare success story whose benefits were destroyed under the leadership of General Abu Shadi when he decided to once again return to importing.