The year 2017 can be briefly described as the post-economic-shock year; it was witness to the repercussions of the economic measures taken by the government at the end of 2016, part of the deal with the International Monetary Fund for Egypt to receive a US$12 billion loan. These measures, at the forefront of which were the liberalization of the exchange rate and the hike in energy prices, were inevitably reflected on our economy coverage.
The rise in prices of goods and services was the most salient consequence of the policies that began with the implementation of the value added tax in September 2016, but expanded in November of the same year to include the fall in value of the Egyptian pound to the US dollar by half as the exchange rate was liberalized and the hike in electricity and fuel prices as subsidies were lifted.
We embarked on covering the impact of the consequent rise in prices on people’s livelihoods, and how lower social classes are adapting to policies that in practice result in further impoverishment. We also sought to clarify the relationship between the fall in people’s purchasing power and the ultimate drop in economic growth.
The government made decisions that were meant to reduce the negative repercussions of these policies on citizens and the economy as a whole, such as raising subsidy allocations targeting the lowest income earners and raising interest rates in banks. But our coverage depicted the limitations of these decisions as the rise in subsidies failed to increase as much as the price rises — and was misdirected. Moreover, raising interest rates did not curb inflation.
A year after the pound’s flotation, it became clear that not only were regular citizens bearing the brunt but also the investors who were supposed be encouraged by these policies, according to government statements.
As the year came to a close, we hosted financial economist Mohamed Sultan to evaluate Mada Masr’s economics coverage in discussion with the team. He found that our 2017 coverage was generally centered around inequality. Whether this was deliberate editorial policy or not was not clear, but it is evident that was the single most important idea in the wake of the measures of late 2016. Inequality is reflected in the distribution of tax burdens among various social classes, inflation rates and income inequality.
But did we successfully reflect inequality in the aftermath of the economic measures of 2016?
Sultan made several criticisms of our coverage, starting with our publishing economy news with limited context that could show its actual meaning and impact on the reader: “Information is available but one of the main functions of economy journalism is to reduce noise. There is a lot of information that can be easily dissipated or lost, specially for readers who are not specialized in the field, precisely due to the lack of context.”
Viewing the repercussions of economic policies as the main feature of 2017, as opposed to 2016 when policies were being drawn up, Sultan was hoping to see closer, more inquisitive and investigative observation of the changes, rather than typical news gathering. “While the year was not a year of news, the coverage was always waiting for news to comment on,” he said.
Another problematic issue for Sultan related to the use of official indicators and the types of sources chosen to comment in our stories. Official statements and the broader field of economics consistently seek to blur or hide the issue of inequality.
For example, it is well known that the impact of inflation differs depending on where an individual lies on the income scale, yet official figures refer to a unified rate. Sultan felt that our coverage did not question the gap between official statements and figures and the reality, especially on issues of inequality. Taking official inflation data for granted was one example.
“There is a problem when Mada is embroiled in disseminating this [unified] figure, How can I tell someone that the inflation rate is 30 percent when people are buying at prices 100 percent higher than the year prior?” he explained. “How would people believe me then? If there is even an analysis that would clarify the difference between the two figures, this would make a difference.”
The types of sources cited in our stories, many of whom come from investment banking backgrounds, also serve official statements that overlook issues of inequality. This type of source “cares more about the development of indicators than about the degree to which these indicators reflect reality and inequality,” said Sultan. “So you are depending on data that overlook these factors and then further approach sources who have no interest in helping you with criticism. In fact, these sources consider the re-evaluation of figures either too academic or skeptical in a way that does not suit an economist with sound knowledge of the field.”
And even though our coverage is centered on inequality, it remains unclear how it highlights the various forms of income disparity, and the extent of the impact of the crisis. Sultan gave an example of a feature on Mada advising people on managing their personal savings. The report targeted savers as its audience and gave them several options for investment, including real estate and stock exchange. “But within the story, there is no mention of the different categories of savers, who represent only 30 percent of Egyptians, while only 8 percent of them are capable of investing in real estate and/or in the stock exchange.”
Lack of coverage on taxation, despite its significance and relevance to aspects of inequality and public policy, was another issue Sultan found problematic in 2017. “For example, in the stories that tackle the issue of subsidy cuts, no one proposed imposing higher taxes on upper classes as an alternative to cutting subsidies on the poor. There are social categories such as those who invest in stock exchanges and real estate who pay zero taxes. Meanwhile, in a state such as Israel, capital gains tax reaches up to 48 percent.”
Finally, Sultan asked where the people are in our economy coverage — a question that we also put to ourselves. For people to become more visible in our economy coverage, we need to better challenge the traditions of economy journalism, which often approach stories more technically and less humanely.