CAIRO: When a housekeeper came to work in Cairo on Thursday, she had a dreamy look in her eyes.
According to a calculation she had heard, if all the money looted by businessmen and government officials were recovered and divided up, Egypt’s 80 million people would each get LE 250,000 ($42,500). "What I could do with such money!" she sighed.
If that figure were true, it would mean an impossibly huge $3.4 trillion — some 15 times Egypt’s annual GDP — had been looted.
The idea that vast amounts can be recovered is shared by the civil servants and workers who have gone on strike at businesses and factories across the country, at a time when the government finances are at their most vulnerable.
Whoever rules Egypt, one of its biggest challenges will be to manage the expectations of newly empowered workers.
Analysts say this will put pressure on the military to quickly bring credible opposition figures into government to deliver a message many Egyptians do not want to hear — that it is in no position to meet demands for higher salaries.
The government’s finances had already been under pressure. In the financial year to June 2010, it financed almost a quarter of its LE 367 billion budget by borrowing locally and from abroad.
That was equivalent to 8.1 percent of gross domestic product (GDP). The government before the protests had hoped to reduce this financial year’s deficit to 7.9 percent to GDP. It now says it could be as high as 8.4 percent.
Egypt’s central bank said it sold LE 5.5 billion ($935 million) in domestic treasury bills as planned on Monday: LE 2 billion in 182-day T-bills at an average yield of 11.733 percent versus 11.779 percent at last week’s auction and LE 3.5 billion in 364-day T-bills at an average yield of 12.033 percent versus 10.444 percent at the last auction on Jan 13.
"If they begin to bow to these demands in a short period, I think you’re going to have a second level of shock effects to the economy" after the earlier political protests, said John Sfakianakis, an economist with Banque Saudi Fransi.
"Wage increases would boost inflation, because that would translate into direct additional consumption by Egyptian workers. People will spend the money and drive prices up."
The government’s revenue from taxes will drop substantially in the coming months because of a short-term collapse in tourism, worker remittances and foreign investment.
If it borrows to finance any wage increases, it will be doing this precisely when the cost of borrowing is highest because of a political risk investors are placing on its debt.
The yield on 91-day Egyptian pound treasury bills has jumped by a full percentage point since protests erupted last month to about 10.95 percent.
Hard task
It will not be easy to explain this to people like Safat Goudah, 52, a widow with five children who was on strike in front of the television building last week.
An assistant editor, she said she earned LE 700 a month, including bonuses, after working at state television for 22 years.
"If they distributed all the billions that Mubarak stole and distributed it to the 80 million Egyptians it would be enough."
Egypt’s new military rulers warned workers on Friday that the labor unrest threatened national security and the strikes must stop, but analysts said that unless opposition faces are quickly brought into the government these warnings may fall on deaf ears.
The military is expected to announce a new cabinet in the coming days.
Many influential figures seem to appreciate the size of the problem. On Friday, Sheikh Yousef Al-Qaradawi, a Qatar-based preacher and one of the first to back the revolution, called on Egyptians to return to work.
"I call on everyone who has stopped working, gone on strike or who is at a sit-in, that they support this revolution by working. Be patient," he said in a televised sermon he gave in front of hundreds of thousands of Egyptians in Tahrir Square.
Analysts said it will be a hard slog for the government to decide what money was illegally gained, let alone track down and recover it.
"Corruption was widespread in Egypt. You could not do business without being involved in corrupt deals. If they start indicting everybody, then they will have to indict the entire wide business community in Egypt," Sfakianakis said.
Even tracking down the money of the Mubarak family will not be easy, which analysts say could run into billions of dollars.
"It is a laborious thing that is going to take a hell of a time to trace it, find it and repatriate it," Sfakianakis said.
"It could be in shell companies…it’s not going to be cash just sitting in Switzerland waiting for the authorities to call it up."
