Saturday, November 26, 2011

Egypt’s dire economy

Some eight months after the ouster of its long-serving strongman, Hosni Mubarak, Egypt’s revolution remains the most prominent byproduct of the so-called “Arab Spring.” But where, exactly, is Cairo headed? While there remains no shortage of optimism about Egypt’s future in many quarters, a close look at the economic indicators suggests that the country may not be moving toward post-revolutionary stability at all. In fact, it is rapidly heading in the opposite direction.

Since this spring, in a development largely unnoticed by the outside world, the Egyptian economy has virtually imploded. Between February and June of this year, the country’s stock exchange shrank by nearly a quarter, sending shock waves through the region’s jittery financial markets. Worried over the Egyptian government’s post-revolutionary solvency, the International Monetary Fund proffered some $3 billion in preferential financing to the new government to stabilize the economy. But Cairo chose to reject the offer, believing that Middle Eastern nations would step in and fill the void with the necessary investment and aid.

Unfortunately, they haven’t. Despite lofty pledges of assistance, tangible help from the Persian Gulf’s wealthy monarchies has been exceedingly slow in coming. (Egypt is still in negotiations with Saudi Arabia and the UAE for a notional $5 billion in loans, while Qatar has delivered on a grant of $500 million, but only in recent days.) more