Isis Normagne Pascual 2014-73235

Country Report: Egypt Economics 191 Paper

Hailed as “The Gift of the Nile” by Greek historian Herodotus, the Arab Republic of Egypt

is home to one of the oldest human civilizations and the longest river in the world, Nile river. It

lies between two continents, Northeast of Africa and Middle East of Asia, with Cairo as its capital.

It was named Kemet, which means black land, by the ancient Egyptians because of the rich, dark

soil along the Nile river. In present day, Egypt is being led by President Abdel Fattah el-Sisi who

recently won his second term in the March 2018 elections. Egypt’s economy heavily relies on

agriculture, tourism, and cash remittances. The GDP of Egypt is at 336.3 billion USD in 2016 with

a growth rate of 4.3 percent. Economic prospects may be looking good for the country, but a lot

of political, social, and economic issues remain rampant and unsolved (“Egypt Country Profile”,

2018).

Figure 1. Map of Egypt. Retrieved from Google Maps.

Copyright 2018 by Google.
 Political unrest continue to plague the country even after the 2011 Egyptian revolution

which ousted president Hosni Mubarak and ended his three-decade, oppressive regime, and the

2013 coup d’état which removed Mubarak’s successor Muhamed Morsi from power. El-Sisi won

a landslide victory for the second time this elections garnering 97.08% of valid votes with a 41.5%

turnout. This victory came as a no surprise, but not for the good reasons. In his bid for reelection,

el-Sisi effectively curbed opposition through force and intimidation. Five potential candidates

were forced out and only Moussa Moustafa Moussa, who is also an el-Sisi supporter, was allowed

to run against him. Most notably, prominent individuals such as former anti-corruption chief

Hisham Geneina, who threatened to expose incriminating information about army leaders’ role in

the 2011 Egyptian revolution, and retired general Sami Anan, who was supposed to run against el-

Sisi, were assaulted and arrested early this year (Michaelson, 2018). Egyptian authorities actively

strengthened the government’s media crackdown few months ahead of the elections. They have

been buying shares of media companies more openly now, arresting journalists even for the most

trivial reasons as long as their reports somehow reveals the current state of the country, and

controlling the press to spread propaganda (El-Faizy, 2018).

Egypt ranks 117th out of 180 in the 2017 Corruption Perception Index with a score of 32

only 2 points behind the Philippines as shown in Table 1. Egypt’s score dramatically increased

from 32 out of 100 in 2013 to 37 when el-Sisi took power. However, it has been decreasing since

then. Violation of human rights, brutality and censorship have been worse in the last years with

the military-backed regime. El-Sisi’s National Anti-Corruption Strategy launched in 2014 has been

nothing but antithetical. Despite the strong legislation against corruption, problems with

implementation remain a huge challenge with widespread clientilism (“Egypt: Overview of

Corruption and Anti-Corruption”, 2018). In comparison to the Philippines, both countries seems
to have the similar set of problems. With a score of 34, the Philippines is also deeply entrenched

in corruption with rampant patronage, clientilism, human rights violations and media censorship.

President Duterte’s nationwide war on drugs campaign has claimed an estimated 12,000 lives of

alleged drug addicts who are mainly urban poor (Tawatao, 2018).

Table 1. Corruption Perception Index 2012-2016. Retrieved from Corruption Perceptions

Index 2017. Copyright 2018 by Transparency International.

Egypt may be the largest Arab country with 1 002 000 km2 surface area, but overpopulation

has been one of its biggest challenges to growth and development. The population issue is so

serious that el-Sisi considers it as one of the biggest threats to Egypt’s national development

alongside terrorism. Since 1966, its population has been rising annually as shown in Figure 2.

Egypt’s population has grown by 22.43 percent from 78.2 million (2010) to 95.69 million (2016)

in a decade only. Its population density is 95.5 per square kilometer. Due to majority of Egypt’s
land being uninhabitable desert, the population is deeply concentrated in habitable areas from the

north to south of Nile River. Population is also expected to reach 119 million in 2030. Life

expectancy at birth has doubled from 1937 to 2015 and this can be attributed to the significant

decline in mortality levels from 16.9 deaths per 1 000 population to 6.1 deaths per 1 000

population. In order to address this issue, the government has been carrying out efforts to

strengthen family planning and reproductive health. High number of births is usually associated

with high marriage rates in Egypt. Research shows that most married women who give births in

the first and second years of marriage are less educated. Fertility rate is at 3.2 births per female.

Children 0-14 years old make up a significant portion of the population at 35.5 percent (Ragab, et

al., 2017).

Figure 2. Egypt’s Population 1960-2016. Retrieved from World Bank Population.

Copyright 2016 by World Bank.

In 2017, the government announced the implementation of the Two Child Policy under the

campaign “Egypt Development: Two Children Only”. The policy is not yet being strictly enforced,
but the government has been making efforts to encourage family planning, education and religious

discourse as well in order to increase awareness about the population crisis. As religious beliefs

against family planning continue to prevent understanding of family planning, the government

strengthens its educational campaign preaching that population control is a national responsibility

(Mekky, 2017).

Egypt’s ranks 111th in the 2015 Human Development Index (HDI) with a score of 0.691.

As illustrated in Figure 3 and Table 2 which both show data from 1990 to 2015, Egypt’s HDI score

increased by 26.4 percent from 0.547 to 0.691. Life expectancy at birth, expected years of

schooling, mean years of schooling, and GNI per capita have also been increasing together with

the HDI score at 10 percent, 30 percent, 100 percent, and 70 percent respectively. On the other

hand, the Philippines is behind Egypt at 116th with 0.682 score (United Nations Development

Programme, 2016).

Figure 3. Egypt’s Human Development Index. Retrieved from

Human Development Reports. Copyright 2016 by UNDP.
 Table 2. Egypt’s Human Development Index Trends. Retrieved from Human Development
Reports. Copyright 2016 by UNDP.

According to the International Monetary Fund (2017) report, Egypt has been gathering

strength as it has been taking decisive measures to reform the economy while strengthening social

welfare. Egypt has been facing high public debt, widening current account deficit and declining

reserves that is why the government implemented an IMF-supported program funded through the

IMF’s extended fund facility. Egypt adapted a flexible exchange rate which normalized the foreign

exchange market. Monetary policy aims to decrease inflation which reached 30 percent since April

2017 and is caused by the depreciation of pound and tax reforms. In order to reduce the budget

deficit, a value-added tax was implemented to increase tax revenues. Energy subsidy was also

reduced in order to allocate more funds for health and education spending and cash transfers.

Measures to increase labor force participation of women and youth were also taken.

The economy of Egypt has been struggling for many years mainly due to political

transitions. As a result, growth rate plummeted and unemployment increased. As the mainstay on

Egyptian economy, the agriculture sector employs 25 percent of the workforce. The manufacturing

sector, which accounts for 16.6 percent of GDP, went in danger when many foreign investors

pulled out due to political unrest. However, due to the economic reforms, foreign investors began
coming back. On the other hand, terrorism, which accounts for approximately 11% of GDP, fell

as terrorist attacks increased. But the weaker currency may attract more tourists. About 50 percent

of the population live near or below the poverty line. The share of exports in GDP is at 12.19

percent. Gains of 24.5 percent are expected in 2018 most especially with a boost from the weaker

currency. In 2017, real GDP grew by 4.2 percent and is expected to grow by 4.9 percent in 2018.

Private consumption and robust exports are expected to be the main drivers of this growth. A

strong business sentiment and an improved regulatory environment will likely increase foreign

investment (Euromonitor International, 2018).

Egypt’s economy is growing at a strong pace, but rising debt burden may pose a huge

problem. The country’s total foreign debt increased by 41 percent to 79 billion USD in just 2017.

Most of the debt are made by the central bank whose debts are not subject to monitoring of the

Parliament. These are expected to service the budget deficit and finance prestige projects such as

new administrative capital in the desert outside of Cairo. As mentioned earlier, Egypt is in an

agreement with the IMF among other lending institutions and this has led to unpopular austerity

measures. While prices of good continue to rise, subsidies for important commodities such as

petroleum and sugar were cut. Despite the effort to make up for this, income transfers have reached

to a few million families only (Stevenson, 2018).

References

Egypt Country Profile. (2018). Retrieved from http://www.bbc.com/news/world-africa-13313370

El-Faizy, M. (2018, March 15). Egypt Launches Unprecedented Crackdown On Media Ahead Of
Sisi Re-Election Bid. Retrieved from http://www.france24.com/en/20180309-egypt-
takes-unprecedented-steps-control-media

International Monetary Fund. (2017). IMF Country Focus. Retrieved from

https://www.imf.org/en/News/Articles/2017/09/25/na092617-egypt-the-economy-is-
gathering-strength

Mekky, S. (2017, October 19). Egypt to tackle overpopulation with '2 children only' plan.
Retrieved from http://www.arabnews.com/node/1180401/middle-east

Michaelson, R. (2018, April 02). Sisi Wins Landslide Victory In Egypt Election. Retrieved from
https://www.theguardian.com/world/2018/apr/02/sisi-poised-to-declare-landslide-victory-
in-egypt-election

Ragab, A., et al. (2017, June 14). Population Situation Analysis Egypt 2016 Report. Retrieved
from http://arabstates.unfpa.org/en/publications/population-situation-analysis-egypt-
2016-report-0

Stevenson, T. (2018, January 4). Egypt's rising debts : "A sign of crisis" - Qantara.de. Retrieved
from https://en.qantara.de/content/egypts-rising-debts-a-sign-of-crisis

Tawatao, D. (2018, January 19). World Report 2018: Rights Trends in Philippines. Retrieved
from https://www.hrw.org/world-report/2018/country-chapters/philippines

Transparency International. (2018). Corruption Perceptions Index 2017. [Table]. Retrieved from
https://www.transparency.org/news/feature/corruption_perceptions_index_2017

United Nations Development Programme. (2016). Human Development Report 2016. Retrieved
from http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf