NEWS ANALYSIS: MULTIPLE CHALLENGES AWAITING EGYPT’S NEW GOVERNMENT

CAIRO, Egypt Multiple economic and political challenges are awaiting the Egyptian new government, that has just undergone a cabinet reshuffle on Wednesday, including 10 new ministers, a few days ahead of submitting the cabinet’s new programme, to the newly elected parliament for approval.

The shake-up focused on economic portfolios, including the ministries of finance, investment, tourism, antiquities, civil aviation, justice, manpower, transportation and irrigation, while a new ministry for public business sector was created, to raise the total number of ministries to 34, under Prime Minister, Sherif Ismail.

Six months passed since Egyptian President, Abdel-Fattah al-Sisi, sacked the previous government, led by Ibrahim Mahlab and hired Ismail’s cabinet. Now the new government is facing economic recession, due to deteriorating tourism and foreign investments, as major challenges.

The ailing economy led the country’s local currency, the Egyptian pound, to weaken against the U.S. dollar, to the point that the exchange rate of one dollar has recently approached 10 pounds, for the first time in the country’s modern history.

The Central Bank of Egypt (CBE) has only 16.5 billion dollars as foreign currency reserves, compared to 36 billion before the political turmoil that ousted former long-time leader, Hosni Mubarak, in early 2011.

“The currency exchange rate is the most alarming issue facing the new government, as the CBE pumped billions of dollars, to assist importers and businessmen, instead of using part of them to support distressed local companies and farmers of grains that the country imports,” said Ibrahim Nawwar, economic expert and former spokesman for the Egyptian industry and foreign trade ministry.

Nawwar argued that Egypt imports wheat, beans, lentils and other legumes, besides oil and other food necessities, stressing the government’s policy should focus on reviving relevant industries and agriculture, to limit imports and save foreign currency.

“Egyptian exports used to cover 50 percent of the price of the imports, but now they cover only about 25 percent of the imports, and the country resorts to loans to cover the shortage,” the expert said, stressing the need for a new government with a new vision, not just “a name reshuffle.”

He lamented that, bureaucracy is one of the major obstacles for foreign investments, hoping the new investment minister could make a difference and provide a better investment environment, to help the country out of the ongoing economic crisis.

Many Egyptians started to complain, much of the continuous price hikes of food, fuel and other necessities, particularly after the country partly lifted the subsidies, it used to provide for energy consumption.

“I believe monitoring prices and making necessary commodities available for the average citizen is the biggest challenge facing the new government,” Saeed al-Lawindi, political researcher and expert at Cairo-based Al-Ahram Centre for Political and Strategic Studies, said.

Lawindi warned against “price uncontrollability” amid the government’s inability to restrain the foreign currency exchange rate, that is one of the main reasons for price hikes.

“Another issue is that, President Sisi is working faster than the government, whose performance is sometimes too poor to cope with the president’s pace,” Lawindi argued, hoping the performance of the new government would be up to that of the head of state.

The cabinet reshuffle, hours ago, replaced outgoing Tourism Minister, Hisham Zaazou, with a new one, due to the recession of tourism industry that is considered one of the main sources of Egypt’s national income and foreign currency reserves.

Employing about four million people in best conditions, tourism alone brought Egypt about 13 billion dollars in 2010, when over 14.7 million tourists visited the country.

However, the situation is different today, as tourism has been hit by political turmoil over the past few years, and recently by security conditions, after a Russian plane crash in Sinai killed over 200 last year, and an Italian student’s death in Cairo in early Feb.

Reviving the tourism sector in such conditions and amid growing terrorism in different parts of the world remains the one and only challenge facing new Tourism Minister, Mohamed Yahia Rashed.

“In my opinion, the real problem confronting Egypt is a political problem in the first place, rather than an economic one,” said political science professor, Hassan Nafaa, stressing the necessity for a government with a vision, to unite the Egyptian society “that is still living in a state of political polarisation.”

“We have been looking forward to a new government with a political vision, that can attract the youth to political participation and give them hope in the state, the government and the future,” Professor Nafaa said.

Source: MENA