حفلة 2024

Practical remedies urged for Egyptian economy

The bustling, sprawling metropolis of Cairo on the banks of the River Nile (Photo Credit: Anton Aleksenko)
  • Foreign currency would not be an issue in the presence of a strategic plan with realistic goals that would be carried out by professionals
  • Successful export strategy does not only imply achieving targeted figures, but also to boost exports. A thorough national program is required to open up new markets.
  • There must be a thorough plan for tourism. It is the most vulnerable to risks, therefore we shouldn’t expect miracles from it.
  • It has been 30 days since the start of 2024. Egyptians are watching and wondering what will happen next.

A condition of perplexity brought on by the commonly asked question, “Where are we going?” A question that, in the lack of a clear vision that reassures the people, simply serves to underline the hazy conditions and unclear picture.

I had assumed that there would be a prioritised strategy available for immediate implementation as of the first day of the current year.

The difficulties the Egyptian economy is now undergoing are not the issue; rather, it is the lack of prompt adoption of practical remedies that are necessary to stop the current downturn and quickly restore equilibrium.

A priority plan is a set of objectives that have a beneficial impact on all economic trajectories and have the potential to expedite the process of reestablishing economic stability.

The severity of the situation is increased by the state’s failure to address the challenges and take the policies deemed necessary for the recovery. This leads to the crises getting worse and the economy becoming less resilient until the reforms’ effects are felt.

The threat to the achievements of the last 10 years of diligent effort is another indication of how severe the current situation is.

These accomplishments, that are the true wealth, represent a significant investment of both human and material resources. if the economy does not prioritise its objectives right away, the outcomes of the recently implemented economic recovery could be endangered.

It’s true that there is a severe situation affecting foreign exchange inflows at the moment, being insufficient to meet the state’s primary demands. The current state of affairs is dire unless we have a clear plan for how to develop these resources quickly and sustainably, to ensure steady inflows of foreign cash.

The absence of a well-defined recovery plan imperils not only the economic progress achieved in the last decade but also the future stability of the Egyptian economy. This is because there is a chance that the economy won’t be able to fulfill its obligations on time, which would plunge the country into a severe crisis with dire consequences.

Every stage, in my opinion, has its own priorities. If Egypt’s top priorities over the previous ten years have been to fight terrorism, preserve national security, and prevent the state from collapsing—all of which are necessary to keep the state cohesive—then the current stage undoubtedly has a totally different nature, with the economy taking precedence.

The situation is dominated by the uncontrollably high cost of essential goods and services, the absurd price increases, and the incapacity of large swaths of society to deal with life in light of wage stability.

As a matter of national obligation, I have faith in the endurance and patience of the Egyptian people. However, this should be bolstered by feasible action plans that steer the entire state towards a more resilient and improved economy in the future.

As long as the current economic crisis is characterised by insufficient foreign exchange inflows, the priorities of the action plan should be to confront this file which is important to drive the economy.

The components of the country’s foreign exchange resources include: the Suez Canal revenues, remittances from Egyptian expats, tourism and exports, all of which, except for exports, are susceptible to current geopolitical risks along the country’s borders.

All the countries bordering Egypt are experiencing either violent invasion, as in the case of occupied Gaza, or internal strife, as in the cases of the Sudan and Libya. Undoubtedly, tourism is the first sector to suffer from such conflicts, despite its rapidly increasing input of foreign cash.

Since tourism industry is one of the most delicate that is quickly impacted by political and security threats, it cannot be the primary source of foreign exchange resources for the state. This detracts from Egypt’s appeal as a travel destination.

But, this does not mean to neglect this resource. to achieve swift increase in foreign exchange inflows, a well-planned strategy must be prepared for the post-conflict stage.

As for the Suez Canal, being a significant resource of foreign currency, it is also one of the files that has not been utilised efficiently over the past ten years. However, it is one of the conventional sources of foreign exchange, now being impaired by Israel’s ongoing war on Gaza.

The Canal’s revenues are currently impacted by the Gaza war. Such impact might increase as a result of expanding the war.

As for the third source of foreign exchange inflows to Egypt, that is the expats remittances, it is currently witnessing 30 per cent decline, with the figures are subject to increase in the light of the high exchange rate of the dollar offered in the black market and the localisation of jobs in some GCC countries, which may affect the number of Egyptian expats.

As for exports, a comprehensive economic recovery strategy should take into account factors including competitiveness, global demand, and the local component needed to manufacture goods and services locally in a way that doesn’t put additional pressure on the local currency.

Moreover, the plans must remove all barriers preventing businesses and services from accessing international markets, offer complete assurances regarding competitiveness, and extend all financial backing necessary to encourage exports in order to boost the economy and support earlier and later stages of development.

Growing economy and steady growth rates are prerequisites for sustainable influx of cash into the market. Nations that possess economic resilience and the capacity to draw in foreign exchange capital will be capable of achieving economic development. This indicates that in addition to establishing an export goal, the state’s top priorities must include developing policies, putting processes in place, changing legislations, and researching overseas markets. All this must be carried out by professional experts that are experienced in global markets.

Our unique advantages allow us to expand into international markets. To ensure a seamless export procedure, all that is required is only a handful of adjustments and encouraging government support. The government must provide incentives to anyone who is successful in expanding internationally.

Prioritising exports means concentrating on production and industry along basic axes to increase the economy’s ability to meet the demands of people. Furthermore, by acquiring the foreign currencies from domestic sources, exports are a crucial means by which the state may satisfy its financial commitments without having to borrow money, sell assets, or resort to other short-term, extremely harmful actions to the economy.

Given the current circumstances, careful planning is needed, with many scenarios available for quick deployment. The capacity of creditor institutions to control any future possibilities of the economy’s failure to pay its obligations—which has become less impossible in light of the drop in foreign currency inflows—as well as the people’s stamina are the two main issues.

Stay tuned for more about scenarios to tackle the crisis.

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