(formerly IRIN News) Journalism from the heart of crises

Revolutionary dreams turn into economic nightmare

A poor Egyptian sells sweets on the street [which town/city] to earn a living
Amr Emam/IRIN

Thunderous chanting by thousands of demonstrators in Tahrir Square echoed on Falaky Street, hundreds of metres away, but fava bean seller Ashraf Ibrahim could find no reason to join in the revolutionary fervour.

"The revolution has brought people like me nothing but loss and poverty," Ibrahim, 36, told IRIN. "I wish it had never happened."

Almost 10 months after the euphoria that followed the ousting of Hosni Mubarak, large sections of the population find themselves close to total economic ruin.

The people who had initially hailed the popular uprising that ended Mubarak's 30-year rule as opening the way for their political well-being and economic welfare, are now blaming the revolution for their deteriorating economic conditions, having seen it bring nothing but job losses, higher commodity prices and political turbulence.

The ruling Supreme Council of the Armed Forces recently said Egypt's foreign reserves would plunge by a third to US$15 billion by the end of January and the budget deficit would grow, possibly leading to a review of sensitive subsidies.

The Central Bank put reserves at $22 billion at the end of October, down $2 billion from a month earlier and showing a faster decline than in previous months. Economists say even that level leaves limited firepower to cope with a looming currency crisis.

"Tourists have stopped coming, factories are closing down, and hundreds of thousands of people have already lost their jobs," said Rashad Abdou, an economics professor at Cairo University. "The indicators just reveal the very sensitive economic crisis this country has started to slip into after the revolution."

These indicators have already turned into painful reality for ordinary Egyptians such as Ibrahim. This time last year, the father of six could not find space on this busy street near several ministries to seat his many customers.

Now, however, the turbulence in the vicinity of Tahrir Square is cutting the numbers of people showing up at government offices, destroying Ibrahim's business and making him anxious about the future.

"Before the revolution, I earned enough money to pay the rent for the flat, feed my children, and send them to school," Ibrahim said. "Day after day I find all these things impossible to do. Matters might even get worse."

Tough realities

Away from Tahrir Square, the post-revolutionary economic deterioration is equally palpable. About 337,000 Egyptians lost their jobs in 2011, according to the state-run Central Agency for Public Mobilization and Statistics (Arabic). The unemployment rate has risen to 11.9 percent from 8.9 percent in the third quarter of the last fiscal year (Arabic).

"Egypt's current political and security conditions are not conducive to any economic growth," said Yumn Al Hamaky, an economics professor at Egypt's second-largest state university, Ain Shams. "Arab and foreign investors are leaving and this could result in more job losses."

The Central Bank of Egypt referred on 24 November to a 20 percent decrease in the flow of investments to Egypt in the first half of the current fiscal year.

Most of the cuts were in the tourism sector where millions of Egyptians work, according to Abdou, while some tourism workers had to accept a halving of their salaries.

"Occupancy rates in the nation's hotels are less than 8 percent at present and things can get worse if security and political conditions do not improve," Abdou said. "Some countries are even asking their citizens not to come to Egypt."

On the edge

About 64 million Egyptians - out of a population of 85 million - receive subsidized rice, lentils, cooking oil, sugar and tea, using ration cards (Arabic) but the Social Solidarity Ministry cannot extend the use of such cards for subsidized food, despite rising food prices, say ministry officials.

According to James Rawley, the UN Resident Coordinator in Egypt, 20 per cent of Egyptians are classified as below the poverty line and another 20 per cent are just above it.

"Investment has pretty much frozen up, Egypt is using up much of its foreign exchange, and there is pressure on the exchange rate," said Rawley. "If we have a devaluation, then prices for commodities, including food, may well rise. And higher food prices would increase vulnerability, which can show up in many forms, including increased malnutrition, which is already a serious problem in Egypt."

And the people are rebelling. On 5 November, the residents of Al Badrasheen village in the south of Giza stopped a cargo train carrying two tonnes of wheat and stole its contents, an act billed by some as the early signs of the "revolution of the hungry".

Ahmed Khorshid, an adviser to the Minister of Agriculture for food research, says deteriorating economic conditions can be seen throughout Egypt, but more particularly in the south, where the government has neglected development for decades, resulting in "unbelievable" poverty and malnutrition rates.

"Just go there and you will see for yourself how people are not able to satisfy the most basic of their needs," Korshid said.

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