President Morsi vowed his government will tackle the economic problems of Egypt. The economy, especially tourism, has suffered from two years of political turmoil. An IMF loan has been postponed.
In the last two years, prices of a number of items have risen. Unemployment is higher as well. The poverty rate has risen from 20% to 25%.
Ashraf Mishrif, a political economics professr at King's College London said: “The economy is a victim of the political transition. We have seen the economy is actually suffering significantly from the uprising, the protests over the last two years."Mishrif, an Egyptian himself, says that the last two years of political protests and unrest have hurt foreign investment:“The high political risk associated with the transition has really impacted negatively and led to disinvestment in the country. Some of the companies actually tried to find more a stable market to invest their capital in."
Morsi has struggled to introduce policies to help reduce the debt such as tax and price increases. However, for political reasons he withdrew a number of these measures. Also, the IMF has postponed a crucial loan to help relieve the debt situation, making it even more urgent that Morsi introduce more unpopular policies.
Morsi faces a difficult situation. To win the confidence of foreign investors he has to introduce price increases, reduce subsidies, and take measures to tackle the debt. However, he also faces parliamentary elections and pressure from the opposition. Nevertheless Morsi vowed to tackle the country's economic problems:"I will deploy all my efforts to boost the Egyptian economy, which faces enormous challenges but has also big opportunities for growth, and I will make all the changes necessary for this task."Morsi said he was considering a number of cabinet changes and that he was also going to introduce fresh projects that would make Egypt more attractive for foreign investment:"The coming days will witness, God willing, the launch of new projects...and a package of incentives for investors to support the Egyptian market and the economy."
At the same time, Morsi said that he would not allow Egyptians to suffer new hardships added upon exisitng problems. How he can do this and carry out the measures needed to obtain an IMF loan is not clear. Morsi has close connections with the US, having earned his PhD at the University of Southern California and taught at California State University Northridge. Two of his five children are US citizens by birth.
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