REZK: Building Trust Through Reform
Nilescope

In August, the International Monetary Fund agreed to grant Egypt a loan of $12 billion over three years to support the government’s reform program. This plan includes reducing the budget deficit and restoring stability in the exchange market. However, these economic reforms are coming at the expense of the popularity of the Egyptian government, as it plans to cut subsidies and raise taxes among citizens, a caveat with using an IMF package.

While such reforms and economic measures are necessary for Egypt, there are current avenues for the government to continue winning the popular support for the people and ensure these measures are enacted fully.

Since the Arab Spring, tourism, one of the country’s important industries, has suffered. In 2015, tourism was down 50 percent. The entire Middle East and North Africa region is also facing significant instability and violence, and all of these elements have compounded with six years of low economic growth and a budget deficit higher than 10 percent.

The implementation of these economic reforms has brought great economic instability to many Egyptians. Thousands of Egyptians are already voicing their anger on social media at the staggering inflation rate and the rocky exchange value caused by these reforms. However, in an interview with editors from several major Egyptian newspapers, Egyptian President Abdel Fattah El-Sisi said that Egypt is “at a bottleneck on the way out [of the crisis]” and noted that in order to recover, Egyptians will need to endure “tough measures” and “be patient.”

While the Egyptian public is voicing its anger and nervousness, the government is still in a unique position to lessen panic. Many supermarkets and vendors have drastically increased their prices with the justification that they are responding to exchange rate changes. This price hike has greatly affected the most vulnerable segment of the Egyptian population: the more than 22 million people who live in poverty. In response, the government has turned to the military in order to find ways to meet the population’s needs.

The Egyptian military has been directly providing staple goods at more reasonable prices to force private-sector producers to decrease prices. In order to protect the impoverished portion of Egyptian society, El-Sisi has secured several contracts with the military to produce cement, supply medical items to hospitals, run the government’s “smart card” system for the distribution of subsidized goods, establish fish farms and manufacture water meters. With this partnership in hand, El-Sisi is trying to ensure that Egypt’s most vulnerable population maintains economic and food security while also implementing tough but essential economic reforms.

With the successful efforts to meet the needs of ordinary Egyptians, economics expert and Bloomberg columnist Mohamed El-Erian said Egypt has great potential to succeed if the Egyptian people are well-informed about the benefits of the economic program. Speaking in an interview with Egyptian TV anchor Lamis El-Hadidi, El-Erian explained that there needs to be a commitment by the government to not only implement the reforms but also ensure Egyptian citizens are updated about the progress being made.

Looking ahead, there is still a great need for the Egyptian government to bring not only economic prosperity, but also advances in other areas such as employment and education. According to the National Center for Educational Research and Development, Egypt’s education system is ranked 139th out of 140 countries.

With the recent economic reform occurring in the country, Egypt is in a position to achieve a better outlook thanks to the involvement of government in directly assisting the everyday needs of Egyptians, hospitals and businesses. It would be best for El-Sisi and his associates to look at their recent success and understand that what the Egyptian people need is not only beneficial reform, but also to trust in the efficacy and efficiency of their government.

Wasil Rezk is a freshman in the School of Foreign Service. NILESCOPE appears every other Tuesday.

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2 Comments

  1. It’s realistic article recording the current situation in Egypt.

  2. Hussam Sharaf says:

    Wasil, you tackled the facts professionally and I hope the Egyptian government will pass this bottleneck to secure the prosperity to the majority of the Egyptian population.
    Keep coming with these articles and let all the world see and feel what our President is trying to do.

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