An article in Foreign Policy authored by the Muslim Brotherhood’s former minister of investment Yehia Hamed has said that the chronic mismanagement of public finances by the current administration in Egypt has meant that in the last five years external debt has risen fivefold and public debt has more than doubled.
“The government currently allocates 38 percent of its entire budget merely to pay off the interest on its outstanding debt. Add loans and instalments, and more than 58 percent is eaten up,” writes Hamed.
If the current trend continues, Egypt will soon be bankrupt.
Critics draw attention to a 2016 IMF loan in which the global institution offered Egypt $12 billion to bring down public debt and control inflation as adding to Egypt’s economic woes.
In return Egypt committed to austerity measures to restore economic growth and in April this year, Egypt’s finance minister announced it would cut fuel subsidies by 40.5 per cent and electricity by 75 per cent in the financial year 2019-20.
Inflation has soared after authorities made the decision to float the Egyptian pound in 2016 and the decision made by the treasury to increase public tax revenues by 131 per cent by 2022 has left ordinary Egyptians struggling to afford basic services.
It is not a small segment of society who are affected. A recent report by the World Bank revealed nearly 60 per cent of Egyptians are poor or vulnerable.
Egyptians authorities are indifferent about the plight of poor people in their country, or about strengthening civil society. Keen to continue to attract foreign investment and concerned about the damage the article may have, they have lashed out at Hamed.
In 2016 British investment in Egypt reached $30 billion. Yet even this investment sees little return for the Egyptian people.
Former Egyptian MP Hatem Azzam has said that a 2015 British Petroleum deal which secured the foreign investor 100 per cent of the profit, rather than the traditional 20-30 per cent share, cost the Egyptian people some $32 billion.
After the article was published, Egypt Today accused Foreign Policy of becoming a Muslim Brotherhood platform, whilst Minister of Planning Hala El Saeed said the article contains false information.