Sherif Ismail Paints Bleak Picture of Economy; Vows to Fight Challenges

Egypt’s Prime Minister Sherif Ismail stated that Egypt is suffering from a severe economic ?crisis and that all local institutions should work hard to overcome it.

In a 205-page ?policy statement before parliament, Ismail said Egypt has faced harsh political and economic ?conditions since 2011 and that the time has come to overcome these conditions.?

“We are facing a battle of life and death and we have to change our style of ?thinking in order to move forward and to reclaim Egypt’s leading role,” Ismail said.

“The ?status quo is indefensible and we cannot go back to previous conditions. We all have to ?live up to the expectations of all Egyptians.”?

Ismail said Egypt still faces great dangers that pose a threat to its national security, "coming not only from countries around us like Libya, ?Palestine, Sudan, Iraq, Syria and Yemen, but also from within, in the form of terrorist attacks and ?extremist thoughts.”

Ismail also reminded MPs that Egypt has one of the highest rates of population growth.

“We increased from 77 ?million in 2009/2010 to 90 million in December 2015, with an annual runaway growth of population at ??2.6 per cent or eight times more than a country like South Korea and four times more than a country like ?China,” said Ismail.?

Worse, added Ismail, the unemployment rate increased from nine per cent in 2009/2010 to 13.3 per cent ?in 2015/2016, with this problem most severe among young people ranging from 15 to 29 years ?old.?

Ismail also indicated that Egypt has experienced an alarming deterioration in public services since 2011.

??“We do not have money or investment to improve these services,” said Ismail.?

“With high runaway growth in population, Egypt has had one of the slowest rates of economic ?growth in the last five years. While the population is increasing by more than two million and half ?each year, economic growth slowed to 4.2 per cent.”

Ismail attributed the economic ?slowdown to "a severe decline in sovereign revenues coming from national sources like the Suez Canal and ?tourism.”

On the other hand, said Ismail, “spending on defence services has dramatically increased ?to meet the needs of Egypt’s national security challenges.”?

Ismail explained that the rate of inflation has soared to 10-12 per cent, negatively affecting the ?lives of poor and limited income citizens who spend most of their money on food.?

Meanwhile, Ismail said the budget deficit hit 11.5 per cent of GDP in 2014/2015 while the interest on ?public debt surged to 26 per cent of total public expenditure in 2014/2015.

“Since 25 ?January 2011, or the rise of the revolution against former president Hosni Mubarak, the bill of subsidies ?increased from LE93.6 billion in 2009/2010 to LE188 billion in 2013/2014,” said Ismail, adding that “Right ?now, around 75 per cent of budgetary allocations are directed to spending on salaries and subsidies, ?with only 25 per cent left for spending on infrastructure and public services.”?

Ismail also indicated that foreign debt rose from $33.7 billion in June 2010 to ??$48.291 billion at the end of January 2016.?

Continuing his bleak assessment of the state of the national economy, Sherif referred to the negative ?impact of the Russian airliner crash in Sinai last October, saying that it led to a severe decline ?in the country’s foreign exchange revenues.

“Tourism revenues declined from $10.6 billion in ??2010/2011 to $7.4 billion in 2014/2015,” said Ismail. Worse, Ismail said the bill of commodity imports ?surged to $61 billion in 2014/2015 while exports markedly dropped from $27 billion in 2010 to $22 billion ?in 2014.?

Ismail also lamented low competitiveness of the Egyptian economy and the negative impact of international ?economic slowdown on the country.

In order to counter these negative developments and get the country out of its economic crisis, ?Ismail said his government has developed a two-year economic reform programme.

“This is a ?programme that is supposed to end in June,2018 and we hope in collaboration with parliament to ?implement it, with some changes expected in this programme in accordance with developments,” said ?Ismail.?

Ismail said his government’s programme focused on several points, including safeguarding national security, ?reinforcing democratic infrastructure, implementing an economic reform programme, achieving social ?justice, and improving infrastructure and sectoral development. The programme also ?entails administrative reform, in terms of securing greater transparency and ?fighting corruption, and enhancing Egypt’s role in the Arab, African and international spheres.

Ismail said his government would continue its preventive war against terrorist organisations and ?their sources.

“We will step up cooperation with Al-Ahzar to reform religious discourse to ?reflect the tolerant values of Islam,” said Ismail, adding that “The government will also do its best ?streamline police and military forces in light of the dangers coming from countries like Libya, Syria, Yemen ?and Iraq.?"

In terms of democratic reform, Ismail said his government respects the ideals of the two revolutions of 25 ?January 2011 and 30 June 2013 of turning Egypt into a democratic state based on respect of ?human rights and the rule of law.

To achieve these ideals, Ismail said his government will help establish ?a vibrant civil society, grant greater freedoms to political parties, and issue new media laws in ?line with the new constitution.?

Ismail also disclosed that the government work hard to ensure that local council elections are ?held in 2017, to complete the democratic transition process.

? Parliament speaker Ali Abdel-Al announced that Ismail’s policy statement will be reviewed by a ?committee headed by deputy speaker Al-Sayed Al-Sherif and representatives of most political forces ?in parliament.