Ben Ali, Mubarak and Gaddafi, co-staring the Angry Birds.
Showing posts with label Egypt. Show all posts
Showing posts with label Egypt. Show all posts
Friday, April 1, 2011
Thursday, March 31, 2011
Two reasons to worry about Egypt
Mubarak's fall was one of the most exciting moments in the Middle East in a long while. But I'm not sure that anything we are seeing now is cause for optimism. In a nutshell, here's the problem:
1. Egypt faces impossible choices: I will spare you a diatribe on Egypt's budget and debt dynamics. Suffice it to highlight that on the eve of Egypt's revoltution, the country had a budget deficit of 8% of GDP, depended on Tourism for 20% of its foreign exchange earnings and had expenditures that look like this:
Government Expenditures as % of GDP
Source: IMF
You are reading this right: the government spends 6.1% of GDP subsidizing fuel (5.1%) and food (1%). In his last action in office, Mubarak raised wages, so the 7.1% spent on wages is now higher than it used to be. But oil prices have also risen globally since then, as have food prices. My point? The government is facing a much bigger bill than is implied by the chart above, and must cut subsidies - but this is likely to get people rioting again!
2. No one knows what Egyptians want: Everyone agrees that Egyptians want democracy, but what else do they want? What are their economic priorities? We don't know, because the country has never been a democracy. To appreciate the depth of this mystery, you need to look no further than the Twitter feed of Wael Ghonim, one of the admirable curators of the Egyptian revolution. A couple of days ago, he was asking people via twitter to suggest topics for him for an editorial he was invited to write.
It is heartwarming that a leading activist is listening to the crowds, but it is also worrisome that the demands of Egyptians are not immediately obvious even to himself! Predictably, the reponses were conflicting:
Yes, it is good to see some people want freer trade, but some people want more government spending from a government that can't even afford to maintain its current spending!
I don't envy the economic policy makers in Egypt. They are damned whatever they do.
1. Egypt faces impossible choices: I will spare you a diatribe on Egypt's budget and debt dynamics. Suffice it to highlight that on the eve of Egypt's revoltution, the country had a budget deficit of 8% of GDP, depended on Tourism for 20% of its foreign exchange earnings and had expenditures that look like this:
Government Expenditures as % of GDP
Source: IMF
You are reading this right: the government spends 6.1% of GDP subsidizing fuel (5.1%) and food (1%). In his last action in office, Mubarak raised wages, so the 7.1% spent on wages is now higher than it used to be. But oil prices have also risen globally since then, as have food prices. My point? The government is facing a much bigger bill than is implied by the chart above, and must cut subsidies - but this is likely to get people rioting again!
2. No one knows what Egyptians want: Everyone agrees that Egyptians want democracy, but what else do they want? What are their economic priorities? We don't know, because the country has never been a democracy. To appreciate the depth of this mystery, you need to look no further than the Twitter feed of Wael Ghonim, one of the admirable curators of the Egyptian revolution. A couple of days ago, he was asking people via twitter to suggest topics for him for an editorial he was invited to write.
It is heartwarming that a leading activist is listening to the crowds, but it is also worrisome that the demands of Egyptians are not immediately obvious even to himself! Predictably, the reponses were conflicting:
Yes, it is good to see some people want freer trade, but some people want more government spending from a government that can't even afford to maintain its current spending!
I don't envy the economic policy makers in Egypt. They are damned whatever they do.
Monday, January 31, 2011
The good, the bad, and the ugly in Egypt
1. Good News: Mubarak is still around.
This means that the army is strong enough, and coherent enough, to anchor the transition to democracy.
2. Bad News: Mubarak is still around.
He still does not get the message, and things may need to get worse before they get better.
3. Ugly News: Mubarak is still around.
This means that the army is strong enough, and coherent enough, to anchor the transition to democracy.
2. Bad News: Mubarak is still around.
He still does not get the message, and things may need to get worse before they get better.
3. Ugly News: Mubarak is still around.
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