A great analysis of the current economic crisis hitting Egypt at the moment by Mr. Patrick Boyle, Fund Manager/Banker. Though I am no economic expert common sense leads me to believe that failure to stick with economic plans agreed during negotiations for the 2016 loan with the IMF is a the premium being paid now by the country for this latest IMF loan because confidence is in short supply in this relationship; particularly where the IMF is concerned. The problem however is that there should have been a well articulated government plan going into this recent negotiations with the IMF to gradually balance the books rather than hit the economy with shock therapy that is liable to strain economic growth/investment and prolong the strain on the most vulnerable in the society. Analysts often focus on sophisticated economic solutions, but the priority in my opinion for any prudent solution has to begin with ensuring that the most vulnerable are well protected as much as possible throughout this long path to economic recovery to ensure stability, while avoiding the tendency to rely on shortcuts that may involve the selling off national/strategic assets or following the existing economic model rather than diversification and developing genuinely private industry to minimise imports. There also needs to be a review of all luxury and/or un-necessary assets purchased by government through the years with the aim of selling them to assist in funding the recovery plan-these could be tangible assets that can help Egypt in the short term and possibly ease the foreign currency crunch. As for the new administrative capital it could be interesting to consider converting it into a self-funded international business hub devoted to industries and related R&D/training facilities involved with all forms of renewable energy, water desalination/purification, desert greening, gas exploration / transformation etc. and with a dedicated close airport; all industries that are needed for Egypts development but would also serve as a technology hub the serves all of Africa. So this could be a win win proposition by avoiding the strain to public financing and utilising it to attract foreign industries/capital that have a direct relevance to Egypts future. Obviously terms of contracts need to be defined, a well-articulated plan defined before any form of engagement with potential partners and again private construction companies will need to be involved.
Finally let me suggest that Egypt should also consider involving Egyptian diaspora/ones with Egyptian origin with solid economic/banking credentials to help develop a pragmatic/viable economic plan to guide the country’s recovery in these difficult times. This in-of-itself would demonstrate that the country is now serious about its commitment to economic stability/growth. Unless structural reforms happen Egypt will always be vulnerable to external forces beyond its control however “good times” seem to last; and every shock will become worse than the previous one.
Hope this helps.