A group of economists in Egypt fiercely criticizing the July 3 military takeover issued a statement in which they reveal how the SCAF dragged the country’s economy into bankruptcy.
Reactions against the July 3 military coup d’état continue in Egypt. As the protestors fill the Rabiatul Adawiyya and the Nahda squares, prominent figures have begun to raise their voice against the takeover. The latest example of this is the statement issued by the economists against the coup. In the statement titled “Development is Freedom,” a group of economists accuse of the executioners of the coup as the “profiteers” and the “hijackers.” The same economists criticize the economic performances of the Supreme Military Council (SCAF), which had governed Egypt after the overthrow of Hosni Mubarak for 1.5 years in the period of February 11, 2011 – June 30, 2012. The statement consisting of eight items reads as follow:
“Development is Freedom”
-Statement by Economists Against the Coup-
Egypt has witnessed a heinous crime against its current and future generations. A group of profiteers has taken control of the government, a group belonging to the same regime – in its military and civilian guises – against which the January 25h revolution had erupted. This hijacking is an attempt to return to power a group profiteering from the resources and sustenance of the Egyptian people.
First: For over 30 years, a small class (particular families) has had control of the wealth and resources of this nation. Around 10% of the people had control of more than 30% of Egyptian national income, while 40% of the people received 25% of the income. Furthermore, this gang wants to continue robbing Egypt’s wealth while more than 25% of its people (over 24 million Egyptians) live below the poverty line.
Second: During the rule of the SCAF, economic performance deteriorated in an unprecedented manner. Economic growth dropped from 5.1% during the year 2009/2010 to 2.2% during 2011/2012. Unemployment rose from 8.9% in 2009/2010 to 12.6% during 2010/2011. The budget deficit rose during the SCAF rule to approximately 11%, compared to 8.1% during 2009/2010, while the tourism sector saw $2.2 billion in lost income, and the number of tourists dropped by 2.8 million. The balance of payments saw an unprecedented deficit, reaching $9.8 billion during 2010/2011, and growing to $11.3 billion during the fiscal year 2011/2012. Foreign investment dropped to $2.2 billion compared to an average of $9.8 billion during the period 2006 to 2010. Can there be any worse failure?
Third: SCAF economic policies led to a drop in foreign currency reserves, to reach $15 billion on 30/6/2012 from approximately $36 billion in January of 2011. Meaning the reserve fell by about $21 billion, or 58.4%. And in spite of that, the Egyptian pound lost about 10% of its value compared to the dollar at the cost of destroying foreign currency reserves only so the upper class could withdraw their funds at a favourable exchange rate. Now, are the ongoing settlements with prominent figures of the Mubarak regime a repetition of the same scenario???!!!
Fourth: During the one and a half years of SCAF rule, there was no clear vision in dealing with economic crises. The cost of government borrowing rose from 10.5% to about 13.5% as an average cost on government bonds and notes, keeping in mind that every 1% costs the national treasury LE8 billion per year. In addition, SCAF did not take any action to prevent the exit of wealth abroad, and did not deal with issues of corruption or tax evasion in any serious manner. This cost the country billions of dollars (Hussein Salem, for example).
Fifth: International experience indicates the failure of military regimes in realizing economic development. In fact, some went into bankruptcy (as in Brazil, Spain, Argentina, Chile and many other countries in Latin America and Asia).
Sixth: During the previous decades military types (army and police) have controlled the bureaucracy and local administrations in Egypt. Consequently, there was an unprecedented collapse in the performance of the government institutions, and of the public sector companies managed by unqualified generals and military types. And now, in a continuation of this trend, SCAF has appointed a general as secretary of the council of ministers, in addition to the controls of all other ministries.
Seventh: With the coup, the military regime immediately brought back corrupt figures to government institutions. Is it acceptable that a department manager in the ministry of finance would be promoted to hold two positions simultaneously while he is being investigated in four cases of illegal gain? And in the same ministry, there is an attempt to destroy cases against employees who were being investigated by the public prosecutor during the past period. We have also seen during the past few days a return of many of the old faces. He who used to praise Gamal Mubarak has become a prime minister. In fact, many of the appointed ministers were members of the NDP Policies Committee, and some had histories of corruption during the Mubarak era. They are now spiting us by bringing back the Mubarak regime with its ugly face.
Eighth: Economic development and freedom go together. Historical experience and scientific studies have indicated that a people’s ability to develop must be based on freedom, choice and creativity in all fields. This is contradicted by the militarization of the country in its institutions and apparatuses, in a fascist and failed system.
So we as economists will not accept the return of the old regime, or the militarization of the nation in a fascist and failed system, because this will mean economic devastation for Egypt. This is something we will not accept for our country.
Signatories to the statement:
• Dr. Mursi Hegazy / Former Minister of Finance, Professor of Economics Alexandria University
• Dr. Hussein Hamed Hassaan / Professor of Economics, International Expert in Islamic Banking
• Dr. Meibid Al-Garhi / Professor of Economics, Expert in Islamic Banking
• Dr. Ramadan Maqlad / Professor of Economics Alexandria University
• Dr. Saber Younus / Professor of Economics Workers’ University, Bani Sueif
• Dr. Abdullah Shehata Khattab / Asst. Professor of Economics, Faculty of Economics and Political Science, Cairo University
• And others.