Egypt offers its vision to emerge from the economic crisis .. a strategic plan or just palliative? | Economy

Madbouly said the volume of funds drawn from Egypt since the beginning of the year amounted to $ 20 billion, but he indicated that his government had managed to attract nearly $ 12 billion between Gulf investments and deposits.

Cairo The Egyptian government has presented its vision to emerge from the severe economic crisis the country is going through, and local and global economic circles have been waiting for it, hoping that it will continue with what it described as the journey of economic reform that has begun. 8 years ago.

According to observers and economic experts, the vision put forward by the government did not deviate from the old promises it made in 2016 and repeated on more than one occasion, of which only a few were achieved. Such as placing the shares of government and military companies on the stock exchange and freeing the economy from state control.

Prime Minister Mostafa Madbouly held an international press conference at the headquarters of the General Authority for Investment and Free Zones last Sunday in the presence of a number of ministers to announce the Egyptian state’s plan to deal with the global economic crisis. happens as “the worst crisis the whole world has experienced since the 1920s, that is, since nearly 100 years old.”

Egypt suffered heavy economic losses, and Madbouly estimated the immediate impact of the crisis in the coming period at about 130 billion pounds ($ 7 billion) due to the Russian-Ukrainian crisis due to the rise in commodity prices and indirect consequences by approx. 335 billion pounds (18 billion dollars), which means that the total bonds amount to $ 25 billion.

Hot money escapes

In a comparison between the prices of a number of basic commodities in May 2021 and May 2022, the bill for the purchase of almost 10 million tons of wheat increased from $ 2.7 billion to $ 4.4 billion, an increase of 62.9%, and the oil import bill jumped from $ 6.7 billion to $ 11.2 billion. One billion dollars, an increase of 67.1%, to buy 100 million barrels of oil.

Regarding the amount of hot money coming out of the Egyptian market, Madbouly said that the amount of money that has come out of Egypt since the beginning of the year is $ 20 billion, but he indicated that his government has managed to almost $ 12 billion between Gulf investments and deposits, indicating the deal. To convert bank deposits into direct investment in Egypt.

The Egyptian state’s plan to deal with the global economic crisis is summarized in the following measures:

  • Increase the participation rate of the private sector to 65% of the total investments implemented in the next three years.
  • To make $ 40 billion of state-owned assets available for partnership with the Egyptian or foreign private sector for a period of 4 years.
  • List 10 public sector companies on the stock exchange, two of which are affiliated with the armed forces.
  • The amalgamation of the largest 7 Egyptian ports under the umbrella of one company, and the largest leading hotels as well, to place percentages thereof on the stock exchange.
  • Decrease in public debt from 86% to 75% over 4 years until 2026.
  • To achieve a primary surplus of not less than 1.2% of GDP this year, and to reduce the budget deficit to 6.2% this year.

It is scheduled to release this month (May) a document of state ownership policy, which includes the activities and sectors from which the state will exit in accordance with international standards, but Madbouly has praised the state’s intervention in the economy in recent years, as it has pumped large investments that created more than 5 million jobs.At the same time, he praised the road network and “bridges” that it implemented, in response to the criticism directed at those projects that cost excessive money, which opponents saw as the direction of it. to support industrial projects.

Message to the International Monetary Fund

Egyptian-American businessman and economic expert Mahmoud Wahba disregarded the feasibility of the Egyptian government’s plans to emerge from the crisis, calling it a “message to the International Monetary Fund to speed up discussions on a new loan” and nothing more. “

Last March, the International Monetary Fund announced that Egypt had requested support from the Fund to implement a comprehensive economic program, adding – in a statement – that the continuity of exchange rate flexibility would be needed to absorb external shocks.

Wahba, in statements to Al-Jazeera Net, stressed that what the Prime Minister said could not be used as a real solution, but rather seemed to be a subversive approach, noting that the support of the supporting countries was not for long will not work, because what they offer is only palliative, as he put it.

Egypt has adopted a reform plan from the International Monetary Fund, which included announcing in January 2016 its intention to offer interests in successful state-owned companies and banks in the stock market in the next stage.

In March 2018, the Egyptian government unveiled its intention to offer interests in 23 companies as part of a £ 80bn fundraising program within 24 to 30 months.

However, these plans have remained in implementation in recent years, and Egypt has replaced them by extending loans and attracting hot money (foreign investment in Egyptian state bills and bonds) as a quick alternative, until $ 33 billion in August 2021. reached.

Old vows in new clothes

Dr. Omnia Helmy, former Vice Dean of the Faculty of Economics and Political Science at the University of Cairo for Postgraduate Studies and Research, described the economic crisis as “unprecedented and decidedly different from its predecessors, and effective and final solutions must be found.”

And regarding the reasons that could drive the Egyptian government to fulfill its old promises it made at the World Conference as a new vision to emerge from the crisis, she told Al Jazeera Net that what is new is that global economic crises have become successive. , such as the Corona pandemic and its mutations and the consequent major economic consequences, then the Russian crisis. Ukrainian, and all this requires swift and swift action to implement reforms.

The economic expert, who held the post of director of research at the Egyptian Center for Economic Studies, urged the Egyptian government to accelerate the pace of economic reforms, paving the way for the private sector, whose role on behalf of the state, and note that there is a funding gap that needs to be filled by foreign direct investment such as the establishment of factories and companies and the development of the level of services, because indirect investment has no restrictions on their exit from the country.

She added that Egypt needs to pay attention to the industrial and agricultural sectors, which are the real economic sectors, especially since it is a net importer of food, in addition to raw materials that are listed as intermediate commodities in many industries, and points out that the structure of imports suffers from problems, and then it is all reflected in inflation and the standard of living of individuals and the rise The cost of domestic production.

(Al Jazeera)

old assignments

Egypt has always hesitated to carry out its commitments and has postponed them more than once, the latest of which was a statement by Egyptian Foreign Minister Hisham Tawfiq to Reuters last week, when he said his country’s government had planned listing of shares of a number of state-owned companies on the stock exchange until after the end of the summer holidays for investors.

Economic decisions were at the top of the headlines of Sisi’s decisions, during the Egyptian family’s breakfast party at the end of the last month of Ramadan. His most prominent economic assignments to the government regarding dealing with the global economic crisis were 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.

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