Egypt's economy prepares for austerity measures

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Egypt's economy prepares for austerity measures

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Mursi’s government now faces the tough task of building a broad consensus as it prepares to impose austerity measures.

New restrictions have already been introduced to stop people from withdrawing their savings from banks, but it’s failed to prevent the Egyptian pound from taking a hammering on the markets.

“Every day the index is sliding downwards, this isn’t the first time we’ve seen this,” said broker Abdel Kerim Ek Deki.

Keen to be seen as decisive, the government is now in talks with business figures, trade unions and other broups to highlight the need for tax hikes to solve the crisis. But many fear that won’t be enough to boost tourism, one of Egypt’s biggest industry.

For Cairo resident, Aly Ossman there is no tourism anymore in Egypt: “especially after the revolution and the referendum. And all these things have made the dollar very low in Egypt. We had around, I don’t know, 6 (b) billion (US) dollars (of foreign currency reserve) and now there is nothing. It is decreasing every day.”

Tax increases are unlikely to be implemented until some political harmony is found. President Mursi is due to address parliament’s upper house on Saturday in a speech expected to be dominated by economic policy.