7 - 13 February 2002
Issue No.572
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Al-Ahram Weekly Online 7 - 13 February 2002 Issue No.572 |
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Gift horses
The donors' conference that ended yesterday in Sharm Al- Sheikh came at a critical juncture for Egypt and the region, and demonstrated responsiveness to Egypt's request for some $10.3 billion, including $2.1 billion in quick disbursing assistance to cover the gap in the balance of payments. At this conference, though, as at the previous donors' meeting in Paris in 1999, the prime challenge remained "combating poverty and raising the standards of living of average Egyptians."More than a decade ago, when Egypt's structural reform programme was initiated, it was envisaged that export-led growth, driven by a strong private sector capable of generating employment, would realise this goal.
Today, it seems clear that structural reform, cautiously undertaken and successful in triggering neither political nor social upheavals, has yet to deliver on its promise of economic growth. Global conditions have played their role in determining export markets and levels of foreign direct investment, but at the heart of Egypt's slow-down lies the lack of dynamism of the country's productive and industrial sectors. The policies that have addressed the matter of productivity have sometimes been responsible for this lethargy, as Prime Minister Atef Ebeid recognised recently. Less than three weeks ago, Ebeid stressed the need for reform of financial and economic institutions, and reiterated the promise of monetary and fiscal reform. But until this happens, resources -- and not just those contingent on loans and grants -- will be needed to extend health, education and infrastructure to disadvantaged areas, especially Upper Egypt.
Ultimately, however, growth will occur only in the presence of an industrial strategy. Ambitious projects requiring vast funds may not be the best idea at this time; rather, we must focus on consolidating existing enterprises and upgrading their technological capacity. This must be done if Egyptian industries, currently witnessing a wave of closures, are to survive at all. The question of productivity must be addressed seriously if, four years from today, we are not to convoke yet another donors' conference to bail out the economy.
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