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Austerity measures won't save Egyptian economy

Although Egyptian officials contend that recent austerity measures are designed to protect the poor in the long term, the immediate burden will fall on low-income households.
Employees work on dough for kunafa at a machine in the factory of Arafah Al Kanafani, a shop selling traditional sweets, in old Cairo July 9, 2014. Arafah, which started operations in 1870, is one of the oldest pastry shops in Egypt that sells traditional desserts such as kunafa and qatayef during the holy fasting month of Ramadan, according to the owner Haj Mahmoud Arafah, who is from the Arafah family that founded the shop. REUTERS/Amr Abdallah Dalsh (EGYPT - Tags: RELIGION SOCIETY FOOD BUSINESS) - RTR3XU
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CAIRO — Just over a month after the implementation of the new state budget, the economic crisis is still lingering in Egypt — despite the Egyptian government’s adoption of strict austerity measures such as the unexpected raising of fuel prices, which was reflected in food prices and public transportation fees. This has challenged the government's position in the eyes of a population that ousted the Muslim Brotherhood over accusations that it was leading Egypt into bankruptcy.

The Egyptian government announced austerity measures as part of the general budget on July 5, aiming to reduce the deficit by 10%, equivalent to 50 billion Egyptian pounds (EGP), or $6.9 billion. This was done by partially lifting fuel and electricity subsidies, and adopting progressive taxes and broadening the tax base.

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