Imagine a modest pretty girl who is about to get married to a rich man. When the bride’s friends learn about the marriage, they offer their services to makeover the bride to further impress her groom. But without a visionary artist among them or a willingness to pay for the best, the bride ends up looking worse than before. Moreover, the groom is repulsed by the bride’s new appearance, seeing her made up as a clown, and declines to marry her. This leaves the girl, not only without a husband, but saddled with huge debts that would have originally been paid by the groom.
Blessings aren’t always good for humanity! In fact, blessings can discourage people from exerting adequate efforts, believing their fortune is meant to last. Meanwhile, Egypt’s ancient history along with its nearly 3,000 km of fabulous seaside are completely insignificant unless its government knows how to best capitalize on these tourist resources to generate ample foreign revenues. “Too big to fail”, has been Egypt’s dilemma because the government is confident believing that powerful and wealthy nations will always keep Egypt floating.
Egypt, whose external debts have quadrupled in the last eight years to more than USD157 billion, has been under pressure from the IMF to carry out economic reforms. However, the Egyptian government has been reluctant to apply these reforms, instead spending its foreign loans on fruitless mega-projects, sustaining subsidies to avoid possible clashes with poor citizens, and keeping an enormous number of unproductive state employees on the payroll to maintain their political support.
Moreover, despite IMF urgings to sell the state-owned enterprises, the government is working to build its factories in a number of significant industries such as cement, dairy, textile and others. Senior members of the state apparatus that personally benefit from expanding their economic role, will naturally resist the IMF’s reform program to avoid losing their jobs. Meanwhile, foreign direct investments will never consider expanding their ventures in a nation where they have to compete with state-owned enterprises.
Some economists explain that Egypt foreign debts dilemma lies in borrowing short-term loans that the state expends on long-term projects that don’t offer yields in due time. Does our government lack this basic knowledge? One of the most harmful aspects of authoritarian rule is its narrow-minded behavior that applies a number of defective policies and insists on repeating them due to the lack of accountability and the absence of alternate opinions.
For many years, I was taught that knowledge advances nations – a completely false idiom. Personality is the true driving force in politics as knowledge can be easily manipulated by autocratic decision-makers whose egos are more valued than science. Egypt is probably one of few nations where ignorant and corrupt citizens have exclusive room to express their views in the public media than true experts.
For the Egyptian government, “success” means completing a project in a given time, independent of its economic value. Thus, Egypt’s vision of economic development revolves around spending its foreign loans in developing new cities, expanding roads, and buying new equipment. This policy has expanded Egypt’s debts substantially, but hasn’t created any productive projects that can be used to pay back the foreign loans or even advance citizens’ enjoyment and dignity.
Furthermore, foreign currency loans’ expenditure has negatively reflected on the true productive private sector endeavors as the Central Bank of Egypt is unable to source foreign currency for Egyptian manufacturers to import raw materials. Road expansion isn’t that significant in an economy that confronts a basic crisis in manufacturing. Meanwhile, the over-expansion of real estate has resulted in having over 12-million unoccupied apartments nation-wide.
Egypt’s achievement dogma is best exhibited in its historic national railway that was founded in 1834. Nearly two centuries of railway operation haven’t been enough to create an efficient enterprise. Today, the train system functions with many obsolete cars, regular delays and occasional horrible accidents. Nevertheless, the government only focuses on replacing the old train cars with new ones while the outdated operating system remains in place; thus, the new cars quickly fall into disrepair, while train delays and accidents still occur.
“Sorry, I can’t sell duty free products to a domestic passenger as per a recent managerial decree”, I personally saw a teller say to a passenger at the state-owned Cairo Airport Duty Free shop. However, when the passenger was about to leave, the teller advised the client that he would make an exception and sell him the desired items. Corruption in Egypt is well-rooted and regulations are often broken by the corrupt Egyptian bureaucrats at the expense of the economy.
“Cairo is aging” is a remark that I often hear from many visitors. The defective government policy of tearing down historical buildings, replacing them with ugly towers, building unnecessary flyovers, all of which increases pollution, have obviously resulted in the fading beauty of the city. In fact, Egypt doesn’t need these unwise projects, but a leadership that knows how to best mobilize its citizens by constructively applying policies that stimulate them to increase their productivity and encourage foreign direct investments.
Egypt used to be one of the Middle East’s regional leaders; its economic challenges and begging for cash from regional nations naturally weakened its political status, leaving the government with nothing else than to blame its economic flop on external factors such as Russia’s war on Ukraine or foreign nations conspiring against it.
As anticipated, Egypt has recently managed to reach a compromise deal with the IMF that consists of lending us three billion USD, against roughly twenty percent devaluation of our currency that will enable us to breathe for a short while, followed by a search for another lender. A deal like this still won’t address our primary economic challenges that lie in having a fundamentally misguided vision of economic development combined with well-rooted corruption and an unproductive society.