Income from ships passing through the canal have been a stable source of income for the suffering economy
Amid the political turbulence in Egypt in the past year, revenues from the Suez Canal have been a source of vital revenue for Cairo, which is in the throes of an economic crisis.
Income from ships transiting the waterway accounts for more than 3 per cent of Egypt’s gross domestic product and an estimated 6 per cent of the government’s tax revenues. The canal is also the fourth-largest source of foreign currency income after tourism, foreign investment and remittances. At a time when tourism and foreign investment are low, it is more important than ever.
While other sources of government income have almost collapsed, revenues from the canal have proved resilient. According to figures from the Suez Canal Authority, in the 2010/11 fiscal year, the canal generated record-breaking revenues of $5.1bn.
Analysts expect future leaders to continue managing the canal as previous governments did, meaning that its susceptibility to domestic politics is minimal.
But the canal is not invulnerable to outside shocks. The surge in pirate attacks in the Gulf of Aden in 2008-09 cost Egypt an estimated $642m a year in lost revenues. Along with the global financial crisis, this led to a 20 per cent fall in the number of ships passing through the waterway in 2009. Currently, the state’s greatest risk is Europe’s sovereign debt crisis. Like investors all over the world, it will be hoping for good news from across the Mediterranean.