Living on borrowed time: Morsy's political economics

News article, posted 07.17.2012, from Egypt, in:
Nadine Marroushi
Living on borrowed time: Morsy's political economics (Photo: Al-Masry Al-Youm)

President Mohamed Morsy is seeking to use public spending to build a base of support in diverse sectors of society, but inflation and political deadlock threaten to sink his plans.

Morsy has promised a 15 percent social allowance rise to the basic salary of public sector workers and pensioners, as well as a rise in payments provided to the poor.

“In the first 100 days, he wants to focus on the concerns of ordinary Egyptians to show that this is a president who is aware of their problems, and that this represents a new start,” said Mohamed Gouda, a member of the Freedom and Justice Party’s economic committee.

But he acknowledged that a tough road lies ahead economically.

“We can’t resolve Egypt’s economic problems in 100 days, and we are well aware that these are short-term measures,” he said.

Engaging the poor, and influential

The rise in allowances is a costly promise, but one that would affect many people.

Said Hirsh, London-based economist at the consultant firm Capital Economics, said the move had political undertones.

“It’s a way to buy support from the public sector. These institutions are supporters of the old regime and the military, so it’s a way for [Morsy] to get their support — because if he doesn’t, it could make the day-to-day running of government difficult,” Hirsh said.

Finance Minister Momtaz al-Saeed is quoted in Tuesday’s papers as saying that the rise in the base salary for public sector workers and pensioners would cost the country LE3.5 billion.

This would be paid for by the state’s recently passed budget for 2012/13 and would be applied to salaries starting this month.


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