Egypt’s 2013 in Review: Ten Economic Milestones

2013 was as rich in economic changes for Egypt as it was in political twists and turns. 
1- Egypt falls to bottom of WEF’s safety and security index

Egypt was ranked last out of 140 countries in the World Economic Forum (WEF) released its Travel and Tourism Competitiveness index in March, behind Pakistan, Chad, and Yemen.

The rankings, which were released a week after a deadly hot air balloon accident in the Egyptian city of Luxor killed 19 foreign tourists, also featured Egypt in 85th place in terms of overall travel and tourism competitiveness.

Tourism, one of Egypt’s most vital sectors, accounting for about 9 percent of Gross Domestic Product (GDP), has suffered from a prolonged security vacuum and bouts of violent protests since the country’s 2011 revolution.

2- Egypt receives first Iranian tourists group since the 1980s

On 31 March 50 Iranians arrived in Egypt, becoming the first to do so on an official tourist visit from Iran in decades.

Egypt and Iran had signed a bilateral tourism agreement a month earlier, in a move which critics deemed to be an impracticable part of a political rapprochement with the Islamic Republic by Egypt’s own Islamist government, led by president Mohamed Morsi.

The previous day, the first commercial flight from Egypt to Iran in 34 years took off from Cairo International Airport en route to Tehran, although regular flights never got underway.

In October, Egypt’s transitional government, installed after the ouster of Morsi, suspended all tourism activity with Iran, citing security concerns.

3- Morsi approves Islamic bonds law

In May, Morsi passed a law allowing the state to issue Islamic bonds, or “sukuk,” for the first time in Egypt.

Presented by Morsi’s government as a way to diversify sources of state financing, the law had come under attack from Al-Azhar, Egypt’s supreme religious authority, as well as non-Islamic economists who criticised the bill’s content and its timing.

Executive regulations were supposed to be issued by the cabinet within three months of the approval but the law’s implementation has been indefinitely suspended since Morsi’s ouster in the summer.

4- ILO blacklists Egypt on workers’ rights

In June, the International Labour Organisation (ILO) put Egypt on a short-term blacklist, claiming state violations of workers’ freedom standards.

Egypt has witnessed a spike in labour and other protests since its 2011 revolution. According to a report by the International Development Centre, an Egyptian rights organisation, 1,354 protests took place last March alone compared to 864 protests during the previous month. This means an average of 44 protests per day, or 1.8 protests every hour.

The Ministry of Manpower is currently preparing a draft law on workers’ rights which it hopes will remove Egypt from the ILO blacklist, Abdel-Khalek Farouq, consultant at the ministry, told Ahram Online last month.

5- CBE cuts interest rates for first time in four years

In August, the Central Bank of Egypt (CBE) cut its main overnight interest rate by 50 basis points for the first time since 2009. It lowered the interest rate again in September, and December.

The initial decision was generally welcomed, reflecting a level of comfort with the local currency, although the third cut came as a surprise to analysts and was seen by some as a threat to inflation levels.

6- Egypt regains control over Dabaa nuclear plant site

In late September, Egyptian authorities brokered an agreement with local Bedouin tribes in the west of Egypt’s Mediterranean Coast to regain control of a nuclear site in the area after years of disputes.

The deal brings Egypt one step closer to nuclear power by restoring state control over the Dabaa site, established as far back as the early 1980s, for the construction of a $4 billion nuclear power plant, with a planned energy capacity of 1000 MW.

7- Court declares ministerial committee for privatisation illegal prior to 2006

In September, a final court verdict voiding the privatisation of the Nile Cotton Ginning Company explained in the written judgment that the ministerial committee for privatisation which sold the company had no legal authority to sell state-owned companies prior to its legalisation in 2006 by then-prime minister Ahmed Nazif.

The committee oversaw the privatisation of several state-owned companies since the 1990s.

A month earlier an Egyptian court had annulled the 2006 sale of state-owned department store Omar Effendi to Saudi Arabia’s Anwal United Trading Company.

The final ruling was grounded in the fact that the store had been sold not through public auction but direct order.

8- Government officially sets public sector minimum wage at LE1200

On 18 September, Egypt’s cabinet announced a minimum wage for the public sector of LE1,200 ($174) per month, to go into force as of the beginning of 2014.

The idea of a minimum wage set at LE1,200 per month goes back to April 2008, when textile workers in Mahalla implemented a strike and included the LE1,200 as a demand. The demand gained traction during the 2011 revolution.

In June 2011, Egypt’s interim government set the minimum wage for public sector workers at LE700 ($102), which was criticised as being insufficient.

The raises are estimated to cost an additional LE18 billion annually, for a government that already allocates nearly a quarter of its total expenses to public wages.

9- Egypt dismisses IMF loan

After two years of halting negotiations over a conditional aid package from the International Monetary Fund (IMF), Egypt’s interim government, in power after president Morsi’s fall, said it would not continue to seek the loan.

The loan, which at the time of Morsi’s ouster amounted to $4.8 million, was deemed unnecessary after Gulf nations — hostile to Morsi’s Muslim Brotherhood group — showered Egypt with $12 billion in aid pledges immediately after his ouster.

It was also deemed unattainable, according to Finance Minister Ahmed Galal, requiring relatively rapid structural reforms to Egypt’s economy, such as the repeal of fuel subsidies, which would come at high political cost and inflict additional hardship on Egypt’s poor.

10- Egypt gets first sovereign upgrade in three years

For the first time since the series of downgrades that followed the 2011 revolution, Egypt’s sovereign credit rating was raised last month.

International credit rating agency Standard & Poor’s raised its long- and short-term foreign and local currency sovereign credit ratings for Egypt from “CCC+/C” to “B-/B” with a “stable” rating outlook.

The upgrade was prompted by the generous aid the country had received from oil-rich Gulf nations following Morsi’s ouster, and which put Egypt in a better position to manage short-term fiscal and external financing needs, said S&P.

Source: Ahram Online

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