zad jordan news –
There is no question in Egypt about the economic crisis the country is going through, which threatens the 8-year course of what the Egyptian government describes as economic reform, due to the impact of the Russian war on Ukraine, and the consequent negative economic effects.
This seems to be what prompted President Abdel Fattah El-Sisi to announce a package of economic decisions to confront the crisis. Will these decisions help address the rise in prices, curb the wave of inflation and to correct the economic course?
During the Egyptian family’s breakfast party in the last week of Ramadan, Sisi’s most prominent economic instructions to the government regarding dealing with the global economic crisis came as follows:
Instruct the government to announce a program for private sector participation in state-owned assets with a target of $ 10 billion annually for a period of 4 years.
Instruct the government to improve all aspects of support provided to wheat farmers.
Launch an initiative to support and localize national industries.
Offers interests of state-owned companies in the Egyptian Stock Exchange before the end of this year.
Listing of shares of military-owned companies in the stock exchange.
Strengthening the role of the private sector in expanding the industrial base of large and medium-sized industries.
Commission the government to present an integrated vision for the promotion of the Egyptian Stock Exchange.
Commissioned by the government to hold an international press conference announcing the Egyptian state’s plan to deal with the global economic crisis.
Previous and recurring recommendations
These decisions come in response to previous and repeated recommendations from experts, institutions and international economic journals, especially with the marginalization of the role of the private sector in Egypt, and the largely reliance on loans to secure financial resources, whether for national projects or the public budget.
In a move that revealed the depth of the financial crisis that Egypt is going through, the Central Bank decided at the end of last March to take a series of strict measures, representative in the devaluation of the pound against hard currencies by about 19 The Egyptian government has formally requested assistance from the International Monetary Fund to help mitigate the economic consequences.
Since 2016, the International Monetary Fund has agreed to grant Egypt 3 loans totaling $ 20 billion, but it appears that this has not been enough to put the Egyptian economy on the right track and enable it to tackle the global economic crisis. does not absorb.
New statements for old decisions
According to economic experts and analysts, Sisi’s decisions are part of the repeated promises he has made on more than one occasion. But there were no serious steps to implement it on the ground, given the generous flow of foreign investors in debt instruments and bonds, and the conclusion of more international loan agreements, and so the situation remains as it is.
But it appears that the economic pressure caused by the war in Ukraine has provided a new sense of necessity to implement the proposals, according to a report by the Financial Times a few days ago, as the conflict forced Egypt has to devalue its currency last March and has requested support from the IMF International Monetary to provide some reassurance to investors.
The newspaper pointed out that the growing influence of the army in the economy has hampered some private and foreign investors due to concerns about competition with the most powerful institution in the country, noting that the army owns dozens of companies in a range of food sectors. production and education to industry and property.
Will Sisi’s initiative succeed in repairing the great cracks in the economy, or is it a call to share losses after implementing the trick and the means? Is there enough time to implement these decisions, which the government has taken very slowly at a time when the crisis is tightening the screws on the weakening Egyptian economy, as described by the Director of the International Monetary Fund , Kristalina Georgieva.
Inefficiency and deterioration of investment
Al-Sisi had previously expressed his frustration with the performance of his government, declaring at the opening of a new chemical plant on December 28 that the state was not good at running the economy, saying: “We have the private sector necessary, we proved incompetent in management, ”he said.According to the British magazine, The Economist.
The Purchasing Managers’ Index (a measure of business and operating conditions in the non-oil private sector) has shrunk private production in all but 9 of the past 60 months, and foreign direct investment off 3.4% of GDP in 2016- 2017 financial year to 1.3% in the 2020-2021 financial year.
The Egyptian government is expected to disclose the details of the “State Ownership Policy Document” within the framework of the preparation of a national strategy for the empowerment of the private sector, and the definition of the activities of the state and the private sector in order to message of reassurance to the local investor, to be an element of attractiveness for foreign investment, and to contribute to strengthening the confidence of international institutions.
Hani Geneina, an economist and lecturer at the American University of Cairo, believes in this context that the implementation of these economic decisions will have a positive impact in reducing pressure on the state’s general budget, and enabling it to gradually reduce the budget deficit. So control the public debt rates.
Geneina explained in press releases that increasing the role of the private sector will put an end to the decline in private investment after 2010, as the proportion of private investment from about 10% of GDP in 2009-2010 to about 2, Decreased by 5%. of GDP in 2020 – 2021, with the private sector reluctant to invest.
Big decisions, slow moves
Asked if Sisi’s recent economic decision-making package was a breakthrough for the private sector and an indication of the state’s relinquishing its hegemony over the joining of the economy, and the revival of the crisis situation, the economist said: and strategist Alaa El-Sayed said: “Changing the course of the traditional economy dominated by the state and the military does not mean it is achieved in a day and a night, and its economic returns take time. , while the economic crisis is sweeping the country hard, and it is difficult for the state to relinquish its control.
In his speech to Al-Jazeera Net, Mr. promise any real breakthrough by taking practical steps to rectify many wrong situations and broadcast reassuring messages to local and foreign investors, such as the release of the founder of the Juhayna Dairy and Juice Company and its Chairman of the Board, Safwan Thabet and his son Saif, after being captured for control of their company, he said.
The Economist magazine cited the Thabet family’s case as an example of the military’s control over the economy and the authorities’ restraint on businessmen and the private sector, which caused the economy to deteriorate and the failure to establish a manufacturing base. to build, and to combat the arrival. of foreign investors, according to the magazine’s description.
And the British magazine said in a report at the end of last April that Juhayna – for the production of dairy and juices – the largest company of its kind in the country – sells its production of milk and yoghurt throughout the Middle East and Africa, and it was one of the most valuable companies on the Cairo stock exchange and impressed investors. However, under the current regime, the foreigners faced “mafia-style blackmail,” as the magazine put it.
Al-Sayed was of the opinion that the recent package of decisions is an attempt to escape the imam, but these are repeated decisions in which the Egyptian authorities have not taken any real steps on the ground, and an attempt to gain time and to gain no confidence in what he calls the danger of direct investment in a country whose economy is controlled by the military, as he put it.
The economic expert expressed his conviction that these decisions to make way for the return of the private sector came after the military companies were overwhelmed by the volume of affairs and projects they had acquired by direct command, and they no longer had the human or material capacity to take more, or to achieve the rest with them, or There is liquidity in the state to complete it, and it is the anchor of the horse, according to his conviction.