The Aftermath of An ArabSpring

The unemployment rate of 13.2 % has certainly a big role in the ouster of Mr Mohammad Mursi from the chair of Egyptian President. Mr Mursi who assumed office on 30 June 2012 granted himself unlimited powers to legislate without judicial review and supervision resulted in 2012 Egyptian Protests.

The economic growth of Egypt is stagnant for the last 2 decades and the situation of the country is not favorable for any foreign investments or any growth in tourism which is the main source of income for Egyptians where 12% of Egyptians work for. This sector alone provides $11 billion to the growth. .

A report in  May by the UN says that the period of 2010-2012 witnessed increased food insecurity and poverty, where 17% of the population doesn’t have sufficient food which was 14% in 2009.

Mr Mursi who was the first elected President in Egypt had kept the agenda to reduce unemployment below 7% during his election campaigns. The unemployment among the population under 30 is 80% where poverty rate is also high which makes 2 of every 5 Egyptians live on less than $2 per day.

The foreign exchange reserve has reduced to 60% due to the lessened activity in tourism and foreign investment sectors; growth rate has plunged to 3% and since the beginning of 2013 Egyptian Pound faced a drop less than 8% which made 7Egyptian Pounds/1US$. Parents are forced to pull kids from the school due to the rise in fees due to the devaluation in the Egyptian Pound.

The first 4 months of 2013 witnessed jump in food prices to 10%! The discussions between Egypt and IMF for a fund of $4.8 bn didn’t get materialize. This fund could be a boon for support for public finances and in this current scenario IMF is careful about taking up this risk.

Egypt got foreign reserve support from Libya ($2billion), Qatar ($3billion), and Turkey ($1billion) of $2billion budget support package. Mursi government was not willing for the regulations put forward by the IMF which delayed the discussion over the fund.