Prospects for Egyptian economy in 2010

26. Feb. 2010

With so little public enthusiasm for official politics, average Egyptians will care more about the country's ability to face the global economic crisis. The last few years have witnessed a labor movement that has mobilized more people in protests than any Kifaya demonstration, as well as a collective concern over rapid cost-of-living increases.

While economic growth has slowed, it is still projected to reach at least 5% in 2010. However, official unemployment figures are rising as is inflation. In late 2008, when year-on-year inflation reached 23%, major government investment in subsidies was necessary. Inflation fell to just above 10% by summer 2009, but reached 13% in October 2010. Although US$1.8 billion in emergency social funding was approved this month, it has been kept off-budget, with the government attempting to stick to IMF-backed efforts to control its public debt.

In this context, although 150 state-owned companies are potentially available for privatization, the government is not in a hurry to find buyers, and may want avoid the anticipated strikes that will surround privatization sales. Instead, partial privatization - with the government retaining a 51% majority - appears the preferred option, offering income for the privatization program, but delaying the full sale of these companies.
[Zawya]