Economic Instability To Cause Further Problems In Egypt

Economic struggles were at the heart of the uprising that resulted in the ouster of Egyptian President Mohammed Morsi. For more on the market reaction to his downfall and the prospects for Egypt's economy, Renee Montagne talks with Farah Halime, an economic journalist and blogger based in Cairo.

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RENEE MONTAGNE, HOST:

One of the primary causes of the Egyptian uprising this week was the country's profoundly troubled economy. Even before the recent protests, there were fuel shortages and even bread lines. Prices have been rising as the currency, the Egyptian pound, has fallen. These problems seemed to get worse in the year that the now-ousted President Mohamed Morsi ran the country.

Egyptian economics blogger Farah Halime says the economic struggles will continue to cause political instability. She joined us this morning from Cairo. Welcome to the program.

FARAH HALIME: Thank you.

MONTAGNE: Now, the Egyptian stock market actually soared up after the ouster of Mohamed Morsi. It shot up more than 7 percent yesterday. It sounds like the market thinks this change is at least good for the economy. Why would that be?

HALIME: Well, the people that were actually behind that rise were mostly Egyptians. If you look behind the story there, foreign investors actually sold their positions on Egypt. So it really shows the local sentiment at the moment, which is very optimistic, and it really conveys that kind of relief that Mohamed Morsi is no longer in power.

MONTAGNE: Well, whoever is running Egypt's government, the government needs to borrow billions to keep running. Will a new interim government get a line of credit from the international community? I know there is a big IMF loan that's been pending.

HALIME: Yeah. Well, on the IMF loan, for example, that's been negotiated for two years now, and it's really unclear whether an IMF loan can be signed when there's no constitution in place. And what Egypt will do is now fall back on the Gulf Arab countries that it had done in the last year. Qatar was a big financial backer of the Muslim Brotherhood. They are continuing to support the Brotherhood at this time. So you have the other two Gulf states, Saudi Arabia and the United Arab Emirates, who are likely to be coming in to replace Qatar at this time.

MONTAGNE: How have economics conditions changed for regular folks there in Egypt?

HALIME: So, in the last - I mean, if you think about it, two years ago, the reason why Egyptians went to protest on the streets was because there was high unemployment. There was a sense of inequality. There was, you know, breadlines still existed, and there were problems getting fuel. But now, fast-forward a couple of years, the problems are far more acute. You have unemployment now at 13 percent, which is a record level for Egypt. Two years ago, it was 9 percent. You have young Egyptians mostly affected by that. Most young Egyptians are actually unemployed, when you look at the government statistics.

You also have nationwide electricity blackouts. Fuel shortages continue to persist. And, you know, we might be seeing kind of a jubilant atmosphere over the last couple of days, but it doesn't take away from the fact that Egypt is still a very critical position, and any new leader will have to face that challenge today.

MONTAGNE: How is Egypt going to pull this off?

HALIME: Yeah. That's a good question. If Egypt is really going to go down a path where it can get over its economic malaise, it has to make these very difficult reforms, and that will probably mean putting through decisions that are unpopular. But if you communicate it properly and if you do it while making sure that the poor don't get impacted, then, you know, that's the way forward.

MONTAGNE: Thank you very much for joining us again.

HALIME: Thank you very much.

MONTAGNE: That's Egyptian economics blogger Farah Halime, speaking to us from Cairo.

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