♠ Posted by Emmanuel in Middle East at 10/19/2011 09:00:00 AMWell here's more food for thought for those fond of Hollywood-style ...and they lived happily ever after inanities. (Those Americans sure are fond of fairy tales in the virtual absence of meaningful improvements in their real lives.) Sure Mubarak was a pretty nasty character--especially to his longstanding political enemies--but is Egypt as a whole better off now than it was under him? Let's just say that things have not been going so well under the current military junta. What an improvement in any event--from a dictatorship by a former military figure to one run by current military figures.
All in all it's not a pretty picture for the freedom 'n' growth delusionists. Worsening race relations aside, public finances are shot. Foreign exchange reserves are dwindling, the current account balance is deteriorating, capital flight is ongoing, and deficits are mounting in a bid to calm down restive 'Springers. The latest news is that S&P is taking a pretty severe axe to Egypt's credit rating:
Standard & Poor's on Tuesday cut Egypt's credit ratings deeper into junk territory, saying the transition to a new government has increased risks to macroeconomic stability...S&P cut Egypt's foreign-currency rating to BB-minus from BB. The local-currency rating was cut by two notches, to BB-minus from BB-plus. All the ratings have a negative outlook...It's a tale of macro woe:
S&P sees a risk that street protests may continue until parliamentary elections take place in the next few months, a constitution is agreed by August 2012, and a president is elected, probably in early 2013...In the meantime the government will likely run high general deficits to appease the population, mainly through food and fuel subsidies. Government revenues are also expected to be low.Only impressionable Americans with too much free time on their hands due to chronic unemployment Stateside buy this garbage-y Arab Spring story. Race riots, anyone? The rest of us--Occupy Wall Street fantasists aside--should lay off that Kool-Aid.
"Risks to macroeconomic stability have risen during the transition period for Egyptian political reform, which we expect to evolve over the next two years," S&P's analyst Trevor Cullinan wrote in a report. "These risks center on the government's fiscal stance but also encompass price stability and balance of payments pressure," he said.
The ratings agency noted that Egypt's net international reserves have fallen by $12 billion to $24 billion since the uprising to September -- a result of current account deficits and capital outflows. "The pace of reserve loss has slowed of late, although the recent violence could create new pressures," S&P warned.