Anwar El-Sadat, Chairman of Reform and Development Party, stated that he is deeply concerned about the current economic situation of Egypt especially in light of a global deterioration driven by the slowdown in China and the decrease in oil prices that affects our Gulf partners. Such developments contribute to the loss of regular sources of foreign currency. The severe depletion of our foreign currency reserves is pushing traders to resort to black markets, which pressures down the pound to unprecedented levels. Meanwhile, the government is trying to sort a way out for such a structural problem by continuing to borrow from the World Bank and other international funds without having any guarantees to make the situation better. The root cause of this crisis is that we simply import double what we export. Therefore, the question is: what happens after we deplete all the loans we can receive, and come back to square one. Are we going to put an end to that vicious circle? What can we do to attack the roots of the crisis?
There is no doubt that we have to courageously face the facts and be frank with ourselves. El-Sadat highlighted that other nations that faced similar situations had to deal with international lending institutions, Greece as the latest example. It was apparent that international funds was ready to fund the economy in peril with low-interest, multi-billion dollar rescue plans to protect the economy from collapse. However, the terms and conditions were very severe and difficult to swallow. It seems that eventually we have no other option but to resort to such institutions and establish partnership with them. Nevertheless, we will have to enact severe measures such as sharply devaluing our currency, complete lifting of fuel subsidies, wide-scale privatization, more taxes, etc. Such measures will negatively affect a wide range of Egyptian households.
Indeed, our resistance to such necessary structural reforms may lead to further deterioration of the situation. Hence, all of us must take responsibility and bear the effects of these actions that seem inevitable no matter how long the time. In addition, we need to intensify the efforts and increase production and improve the Egyptian product in order to be able to compete with foreign products and thus increase our exports and go back to a safe economic territory where we need no more loans or donations.
Finally, Sadat is advising President-Sisi to take advantage of his significant popularity and frankly speak to the Egyptians on the current situation and the tough measures we have to enact to attain a better future. We are quite worried that hesitation in that matter may cause further economic deterioration and concurrently a depletion of Sisi's popularity, and then it will probably be too late to fix anything.