Egypt sees ‘three-year strat­egy’ to re­vive its strug­gling econ­omy

Kuwait Times - - BUSINESS -

CAIRO: Egypt has an am­bi­tious three-year re­form plan that, with for­eign help, can re­vive its strug­gling econ­omy, the min­is­ter of in­ter­na­tional co­op­er­a­tion said. In an in­ter­view, Sa­har Nasr said the “three-year strat­egy” will lead to a re­turn of in­vest­ments, boost in­dus­trial pro­duc­tion and cre­ate jobs. It comes as Egypt faces not only fall­ing growth and a cur­rency cri­sis fol­low­ing years of po­lit­i­cal tur­moil, but also in­creas­ing pub­lic dis­con­tent over ris­ing prices.

“Once these re­forms are all in place, there will be a pos­i­tive im­pact on the econ­omy, and on the so­cial front,” Nasr said. “Es­pe­cially in the medium and long term.” The econ­omy of Egypt, the most pop­u­lous Arab coun­try, has faced ma­jor chal­lenges since the 2011 ouster of long­time ruler Hosni Mubarak. Pres­i­dent Ab­del Fat­tah El-Sisi, who took power af­ter the 2013 over­throw of his Is­lamist pre­de­ces­sor Mo­hamed Morsi, has vowed to get the econ­omy back on track.

His gov­ern­ment has sought help abroad and on Novem­ber 11 the In­ter­na­tional Mon­e­tary Fund ap­proved a $12 bil­lion loan to Egypt over the next three years. The coun­try will also ben­e­fit from the re­lease of the first tranche of a $1 bil­lion World Bank loan and the de­posit by the African De­vel­op­ment Bank of the first tranche of a $1.5 bil­lion loan. Cairo is also fi­nal­iz­ing an $800 mil­lion loan with the Euro­pean Union. Nasr said the aid pro­grams are help­ful but will pro­vide only tem­po­rary sup­port. Donors are “help­ing Egypt to stand on solid ground, help­ing Egypt not to rely on for­eign aid, and not to rely on any bor­row­ing from in­ter­na­tional fi­nan­cial in­sti­tu­tions” in the long run, she said.

‘Three pil­lars’ of re­form

The in­ter­na­tional aid is “to im­prove Egyp­tians’ liv­ing stan­dards”, she said, in a coun­try where 27.8 per­cent live be­low the poverty line and pub­lic debt is near­ing 100 per­cent of Gross Do­mes­tic Prod­uct. The goal is a re­turn to sus­tain­able eco­nomic growth of six per­cent by 2018, com­pared with 3.5 per­cent in the first half of this year. The gov­ern­ment’s re­form plan is based on “three pil­lars”, Nasr said.

The first is to boost pri­vate sec­tor in­vest­ment. “The key of the re­form pro­gram is im­prov­ing the busi­ness en­vi­ron­ment, en­cour­ag­ing in­dus­tri­al­iza­tion, and also pro­mot­ing ex­ports,” she said.

The sec­ond is re­struc­tur­ing the bud­get, in­clud­ing by cut­ting sub­si­dies, which rep­re­sent 7.9 per­cent of gov­ern­ment spend­ing. “On so­cial hous­ing, sub­si­dies were ini­tially go­ing to the de­vel­op­ers and we moved from this sup­ply side to the de­mand side, so that sub­si­dies would be ef­fec­tively tar­geted to the low-in­come or mid­dlein­come house­holds in a very trans­par­ent and ef­fec­tive man­ner,” Nasr said. The third pil­lar is mon­e­tary re­form, she said, de­scrib­ing it as “a ma­jor step in terms of eco­nomic sta­bil­ity”. Egypt floated its cur­rency on Novem­ber 3, which was fol­lowed by a de­val­u­a­tion from the fixed rate of 8.8 pounds per dol­lar to a traded rate of 18 pounds per dol­lar last week.

— AFP

CAIRO: Egyp­tian Min­is­ter of In­ter­na­tional Co­op­er­a­tion Sa­har Nasr works at her of­fice in Cairo.

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