Al-Ahram Weekly On-line 16 - 22 November 2000 Issue No.508
Published in Cairo by AL-AHRAM established in 1875

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Fast forward with the economy

By Ibrahim Nafie

Enumerating the current government's achievements since it came to office last October, Prime Minister Atef Ebeid said the country's economic performance has been rectified, its debts reduced, its utilities renovated, its population educated and its villages illuminated. "Egypt is one of the best countries in the world to invest in today," Ebeid said. "Due to President Mubarak's guidance and wisdom, Egypt's economy has been performing well, earning high international ratings every month."

Ebeid cited the reduction of external debt by $700 million and the trade deficit by $2 billion since last year as signs of the economy's strong performance. The government has also repaid its debt to contractors and importers, assessed at LE8.2 billion, which were invested in projects till June of 1999. Funds have been procured for the remaining government debt of LE7 billion, he said, owed to projects undertaken till last June.

Prime Minister Atef Ebeid with Al-Ahram Editor-in-Chief Ibrahim Nafie photo: Aref Saaddedin

New projects in the areas of education, potable water, health and roads are slated to be launched soon by the government, assessed at LE15 billion, Ebeid said. Next year, he added, the execution of the blueprint for the "grand renaissance" called for by President Mubarak will begin, taking place over a span of 15 years. The programme aims at a complete renovation of markets, integration in the global economy and lifting the majority of currently existing trade barriers.

According to Ebeid, 14 draft laws related to the investment climate and dispute resolution are planned to be presented to the cabinet, before referral to President Mubarak, who will subsequently instruct their discussion in the upcoming parliament.

Speaking of the importance of establishing a technological base in Egypt, Ebeid said a number of proposed incentives for IT-related activities will be presented to the Cabinet for approval next month. An "international manifesto" will subsequently be issued in a bid to solicit foreign investments in the field of IT.

On privatisation, Ebeid expounded how the government's policies in this respect have won international acknowledgment for their success in averting negative social impacts. Out of a total LE12 billion in revenues accrued from the sale of public sector companies, LE2 billion have been used to fund early pensions bonuses for employees, he said. The government is also planning to move ahead with the privatisation of the electricity, airports and ports sectors, while maintaining a majority ownership. Successes were realised on the unemployment front, which has been reduced from 8.2 to 7.2 per cent of the total labour force, an "acceptable" rate, compared to other countries, according to Ebeid. In the current year, the government provided 388,000 jobs in both the public and private sectors, he said.

On monetary policy, Ebeid attributed the recent dollar shortage to the drop in tourism revenues following the Luxor massacre in 1997. This was exacerbated by the oil price decline of 1998, coupled with the surge of cheap imports -- up from $8 billion to $15 billion -- following the Asian financial crisis.

The declining value of the Euro versus the dollar has also caused the prices of Egyptian exports to rise, thus rendering them uncompetitive, he added.

Ebeid explained how the government has delineated certain rules to be followed by the banking sector in the coming phase to achieve stability in the foreign exchange market. Among these is the freedom of banks to determine selling and buying prices of foreign currencies with the Central Bank of Egypt, which would cover the gap between supply and demand for currencies in commercial banks. Ebeid maintained that clients are also free to transfer, deposit and withdraw any sums of foreign currency they pleased. Ebeid also spoke extensively of the current sugar shortage and his government's plans to resolve it.

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