A fundraising campaign unveiled last week by Egyptian President Abdel-Fattah al-Sisi to shore up the country’s national budget will have little impact on the hard-hit economy.
Sisi last week said he would give up half his salary and property “for the sake of our country.” He called on the Egyptian people to make “real sacrifices.”
Shortly after Sisi’s remarks, the central bank said it had created a “Long Live Egypt Fund” to help the economy.
Prime Minister Ibrahim Mehleb said he was dedicating half of his salary to the fund.
The military said it would donate 1 billion Egyptian pounds ($140 million) to the fund, Defense Minister Sedky Sobhy said Thursday.
Sobhy said the amount would be drawn from the budget of the National Service Projects Authority, which regulates the military’s economy.
Top businessmen also pledged donations to the fund.
Ahmed Abou Hashima, chairman of Egyptian Steel, said he would donate EGP5 million ($699,242).
Mohamed al-Amin, owner of Egypt’s free-to-air CBC channels, said he would donate half his holdings in all companies.
Mansour Amer, chairman of Amer Group Holdings, pledged to build a university.
Under Sisi, Egypt faces the same economic problems that led to the ouster of his predecessors Mohamed Mursi and Hosni Mubarak.
The economy suffers from a widening budget deficit, high unemployment and poverty rates, and a hard-hit tourism sector that has reportedly lost millions of tourists compared to 2013.
A similar fund called the “Supporting Egypt Fund” was created under Mursi’s administration.
CBC owner al-Amin, also a board member of the “Supporting Egypt Fund,” said last week that the board would transfer last year’s funds into the new one created by Sisi.
He said the “Supporting Egypt Fund” raised EGP1 billion ($140 million).
Cairo-based economist Abdel Khalek Farouk told Al Arabiya News: “Our experience with donations was quite a disappointment. In the mid-1980s, Mubarak made a donation plea to pay Egyptian debt. It later appeared that his son was making gains from it.”
Pacinthe Fahmy, professor of banking at the Cairo-based French University, said people were sceptical about such funds, noting the lack of information about the spending of previously-raised money.
Another fund was created following Mursi’s ouster on July 3, 2013. Fahmy said the public still does not know how the money from that fund was spent.
“The state’s budget should be reformed, as well as unnecessary expenses spent on the government and envoy missions abroad,” she said.
Fahmy said applying the minimum wage and subsidizing energy products would help the economy.
“There has to be a clearer strategy on where and how the money is being used,” she said.
Even if the money is spent wisely, it constitutes very little for a country of about 90 million people, she added.
“Donations aren’t enough to bridge the public deficit,” Fahmy said.
Farouk described Sisi’s initiative as an attempt to create a model for others to follow, but “the economy of a country as big as Egypt can’t rely on donations.”
In 2012, Egypt tried to secure $4.8 billion in aid from the International Monetary Fund. The deal failed as the country could not fulfil IMF conditions, which included the reduction of energy subsidies.
More attempts were taken to boost the economy following Mursi’s ouster. Egypt’s wealthy Arab allies - Saudi Arabia, Kuwait and the United Arab Emirates - gave $5 billion, $4 billion and $7 billion in aid, respectively.
Sisi’s fundraising announcement came shortly after unveiling painful energy-subsidy cuts meant to save Egypt around EGP40 billion ($5.59 billion) in the 2014/15 budget.