Analysis: As Egypt leaders feud, economy heads toward cliff (Reuters) - Egypt's new Islamist president and his old military foes have come out swinging in a struggle for political power, but their countrymen need them to find a way to work together to avert economic chaos. In the two weeks since his inauguration, President Mohamed Mursi of the Muslim Brotherhood has openly defied the entrenched military by summoning the Islamist-led parliament the generals dismissed on the eve of his election. The political confrontation risks paralyzing the government, and the first casualty could be Egypt's fragile economy, fast heading towards a balance of payments and budget crisis.
When you have to import food and fuel, you are in deep doo-doo;see
What’s behind Egypt’s Problems? How does it affect others?
Posted on January 29, 2011 by gailtheactuary
At least part of Egypt’s problem is that the government has in the past threatened to reduce food subsidies. Now it planning to hold food subsidies level and raise energy subsidies, but it is not clear that the dollar amount of subsidy will be enough. The government is taking steps to make food and energy affordable for most, but there is worry that it will not be enough.
Egypt’s Declining Financial Situation
There is a good reason why one might expect Egypt to start running into problems with energy and food subsidies. It own financial situation is declining, at the same time that the cost of food imports is soaring. If we look at a graph of Egyptian oil imports, exports, and consumption (thanks to Energy Export Databrowser, which graphs BP Statistical Data), we find that Egypt’s oil use has been rising rapidly, at the same time the amount extracted each year is declining.
Message 27128933 |
