CAIRO – The Egyptian economy faces three main stumbling blocks on the road to a recovery, according to a number of economic experts who spoke to Asharq Al-Awsat.



The experts agreed the country’s low productivity—particularly the decline in tourism after the 2011 revolution—combined with the ripple effects of the 2008 global financial crisis, insecurity and political instability, are the key issues to be tackled by Egypt’s next government in its efforts to get the economy back on track.



Egypt now faces a 240 billion Egyptian pound ($34 billion) budget deficit, almost 14 percent of gross domestic product (GDP), with government debt reaching 89 percent of GDP, largely stemming from Egypt’s $21 billion subsidies bill in the 2012–2013 financial year.



Economist Sherif Mukhtar said: “Egypt is going through an economic crisis in all sectors, and needs to increase productivity because it is lower than population growth, which results in an increase in the budget deficit and the balance of payments.”



He added: “The problem can only solved by an efficient system of productivity, especially in the tourism sector, which in 2010 provided revenues of $13 billion.”



Tourism contributed 11 percent of the country’s GDP and 20 percent of foreign currency reserves in 2010—as well as accounting for 12 percent of the country’s direct and indirect employment opportunities, according to Central Bank of Egypt figures. Tourism revenues dropped as low as 8.8 billion dollars in 2011, recovering slightly to 10 billion in 2013. However, this key sector is still suffering, largely due to violence in once-popular tourist areas such as Sinai.



Yaman Al-Hamaqi, a professor of economics at Cairo’s Ain Shams University and a former under-secretary of the economic committee at Egypt’s upper house of parliament, the Shoura Council, said she believed the Egyptian economy was still “in crisis” due in part to the continuing fallout from the global financial crisis and the political events which have rocked the country since the overthrow of president Hosni Mubarak in 2011.



“The Egyptian economy has been in crisis since before the revolution and has not recovered from the effects of the global financial crisis of 2008,” she said.



With a relatively underdeveloped financial services sector free from the toxic assets that caused the global financial crisis in 2008, Egypt was largely shielded from its initial negative effects. However, later price shocks, dwindling export receipts—Egypt’s largest trading partner is the European Union—and declining foreign investment inflows led then-prime minister Ahmed Nazif’s government to issue a 15.5 billion Egyptian pound stimulus package, funded by a temporary reduction on fuel subsidies, increasing sales taxes on a number of goods such as cigarettes, cement and petroleum products and freezing some tax exemptions on Treasury bills and economic free zones.



Hamaqi, however, branded these moves as “ineffective,” and the latest in a long line of unsuccessful measures and mismanagement.



“The same applies to the agriculture sector, which lacks clear vision and is not related to reality,” she said. “Agricultural land in Egypt is being eroded, which is the same situation as before the revolution. Back then there was foreign investment and growth, but now direct foreign investment has dried up.” – Agencies