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The Crisis in Egypt

The Crisis in Egypt. By Rene Gonzalez Jackson Cho. Contents. Brief History Demographics Trade Economic Indicators Explanation of the Crisis in Egypt Possible Leaders and Governments IMF Recommendation. History.

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The Crisis in Egypt

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  1. The Crisis in Egypt By Rene Gonzalez Jackson Cho

  2. Contents • Brief History • Demographics • Trade • Economic Indicators • Explanation of the Crisis in Egypt • Possible Leaders and Governments • IMF Recommendation

  3. History • Egypt's economy depends mainly on agriculture, media, petroleum exports, and tourism • Egypt has received U.S. foreign aid (since 1979, an average of $2.2 billion per year), Mostly in Military. • Corruption • An estimated 2.7 million Egyptians abroad contribute actively to the development of their country through remittances (US$ 7.8 billion in 2009)

  4. Demographics • Population: 80,335,036 (90% Muslim) • Literacy Rate: 71.4% • Life Expectancy: 72 years • School Life Expectancy: 11 years • Education – 1 and 2% of GDP • Second Largest Country

  5. Egypt’s Trade • Italy is Egypt's biggest trade partner. • The U.S. is second • Followed by several European countries and India. • Almost 40 percent of Egypt's exports are bought by European Union countries. • Have held a trade deficits for many years.

  6. Egypt’s Trade Imports • Egypt does not have a large industrial base and therefore imports almost all of their capital goods such as machinery and equipment. • Food represents about 20 percent of Egypt's imports, • industrial chemicals, • wood products and • refined fuels are also imported in significant quantities • Egypt imported $56.2 billion worth of goods in 2009

  7. Egypt’s Trade Exports • Oil was by far the largest export at over 155,000 barrels a day. • Egypt also exports a number of metal products (industrial and finished), • cotton, textiles and chemicals • Egypt's 2010 exports are expected to drop by 18 percent to just under $25 billion due to the worldwide recession and drop in oil prices. • Egypt exported over $29 billion dollars worth of products in 2009.

  8. Trade Deficit • Egypt’s trade deficit widened 42.6 percent in 2010 • demand of imports for consumption and investment, • depreciation of the Egyptian pound and • higher international prices of basic items • such as food. • Labor Abundant Country • Capital goods - Infrastructure • Has Held Trade Deficits For over 5 Decades

  9. Tourism According to the New York Times, • 1 billion lost in revenue in 1 month • Tourism 2nd largest source of revenue in Egypt • Hotel occupancy decline from 70% filled to 5% • Egypt Air is projected to lose 80% of revenue • Grounded 40% of fleet

  10. Problems Facing Egypt • Ruling Party (Lack of Competition) • Political Repression • Crumbling Infrastructure • Inflation (Poverty) • Economic Challenges

  11. Economic Indicators • GDP growth • Average of 4 to 6 % during 1995 to 2007 • GDP per Capita • Nearly Doubled in 5 yrs

  12. Economic Indicators • Unemployment • About 40% of the population is considered Poor • Diminished Tourism • Exports – Keynesian Perspective • Lack of Jobs

  13. Economic Indicators • Inflation • Unstable • Based solely on the dependency of oil • 2008 – US Crisis

  14. Economic Indicators • Government Spending • Military • (Average of 10 to 12%) • Subsidies • Health Expenditures • (Average of 7%) • Education • (Average of 12 to 15%)

  15. Quality of Life • Number of Tertiary Institutions:107 (2005/06) • Tertiary Enrollment:2,153,865 (2004) • Adult Literacy - Percent of Ages 15+:55.6 (2003) • Female Literacy as a Percent of Male:65 (2003) • Net Secondary Enrollment Ratio Percent:81 (2002/03) • Infant Mortality Rate Per 1,000 Live Births:33 (2003) • GINI Index:34.4 (2005)

  16. IMF Recommendations • The IMF is still prescribing pro-cyclical policies that constrain public spending • Despite pledges to address the crisis in flexible and innovative ways, the IMF’s key objective in crisis loans remains “macroeconomic stability” through the “tightening of monetary and fiscal policies.”

  17. IMF Recommendations IMF crisis loans have required policies such as: • lowering fiscal deficits and inflation levels; • buffering international reserves; • reducing or restraining public spending; • increasing official interest rates or restraining the growth of the money supply; • preventing currency depreciation; • providing financial sector liquidity where needed.

  18. World Bank • Main concern is to minimize Poverty in the country; • Lower the distribution gap of wealth • Increase Taxes to corporation • Distribute those funds • Incentives to Reinvest

  19. 2011 Egypt Crisis • January 25 • Protest against decades of grievances by the rule of Hosni Mobarak • Police brutality • Emergency law • Freedom of speech • Free election • Minimum wage • Price inflation for food • Demand the end of Hosni Mobarak’s regime

  20. New Leadership • Preliminary election to be held in June • Possible candidates • AHMED SHAFIQ • AMR MOUSSA • MOHAMED ELBARADEI • AYMAN NOUR • OMAR SULEIMAN • HAMDEEN SABAHI • MOHAMMED BADIE

  21. AHMED SHAFIQ • Commander of Egypt's air force • Minister for civil aviation • Appointed as prime minister by Hosni Mubarak • Credited for modernizing Egypt’s airports • Part of the supreme council of the armed forces that is in power now.

  22. AMR MOUSSA • Secretary-General of the Arab League • Arab league is under the leadership of Hamas • Member of the UN high level panel on threats

  23. MOHAMED ELBARADEI • Former head of the International Atomic Energy Agency (IAEA) • A joint recipient of the 2005 Nobel Peace Prize • Critic of the Mubarak administration

  24. AYMAN NOUR • Former member of the Egyptian Parliament • Chairman of the El Ghad party. • Imprisoned by Mobarak in 2005

  25. OMAR SULEIMAN • Chief of the Egyptian General Intelligence Service (EGIS) • Former vice president appointed by Mubarak during the 2011 civil unrest.

  26. HAMDEEN SABAHI • Leader of the Karama party • Elected to parliament in 2005

  27. MOHAMMED BADIE • Leader of Egyptians Muslims Brotherhood, biggest opposition group in 2010. • The brotherhood is ban in Egypt • Badie was sentence to 15 years in jail in 1965

  28. Revolutions in the Area • Tunisia, Egypt, Algeria, Bahrain, Iran, Jordan, Libya, Morocco, Yemen • Tunisia and Egypt successfully overthrew their government. • Libya in the midst of a civil war • Online Activism • Facebook and Twitter

  29. Democratization • Can Egypt become democratic? • Oil • 90% Muslim • Homogeneous • Education • Wealth • International connections • Society institutions

  30. References • http://af.reuters.com/article/egyptNews/idAFLDE71N0VF20110301?pageNumber=4&virtualBrandChannel=0 • http://economix.blogs.nytimes.com/2011/02/23/economics-and-democracy-in-egypt/?ref=egypt • http://www.nytimes.com/2011/02/27/opinion/27kristof.html?_r=1&ref=egypt • http://topics.nytimes.com/top/news/international/countriesandterritories/egypt/index.html • http://www.nytimes.com/2011/02/24/world/middleeast/24iht-m24late.html?ref=egypt • http://www.nytimes.com/2011/02/24/world/middleeast/24protests.html?ref=egypt

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