Tightening the belt
THE NEW Cabinet approved a LE20-22 billion austerity plan that aims at tightening the budget deficit savings in the current year's 2011-2012 budget. The Cabinet assured that the reduction will not affect basic services or subsidies.
"To save LE20 billion, there has to be austerity but in sectors that we feel do not affect the Egyptian citizen. I want to reduce this [budget deficit] because the deficit remaining as it is means there will be inflation," Prime Minister Kamal El-Ganzouri said last week before the details of the plan were revealed on Tuesday.
Enforcing a maximum wage for public sector employees equivalent to 35 times the minimum wage, currently set at LE700, is the first pillar of the new plan.
Imposing new taxes is on the agenda as the government decided to levy extra taxes on imported cigarettes and tobacco. The measure will not further burden the consumer but the producer, according to the Cabinet.
On another front, the government decided to postpone imposing the new property tax law for another year until January 2013. Meanwhile, the implementation of the new social insurance and pensions law was postponed to July 2013.
A new pricing scheme for mid- and highly-intensive energy consumption industries was also revealed. This comes as a part of a plan that dates back to 2008 to phase out energy subsidies. According to the new scheme, steel and cement industries will witness a 33 per cent increase in natural gas charges. This is compared to a 30 per cent increase in natural gas charges paid by glass and ceramics Industries.
WTO ministerial conference impasse
THE EIGHTH ministerial conference of the World Trade Organisation (WTO) ended this week in Geneva with the participation of 153 countries amid complicated global economic conditions. Although no concrete moves forward on the Doha Round of World Trade talks were reached, the meeting was an opportunity for developing countries, Egypt included, to make their voice heard.
"The global economy has reached a critical point, and serious steps must be taken to redraw its map according to the changes on the international arena," said Mahmoud Eissa, Egypt's minister of industry and foreign trade, during his speech at the conference.
Eissa pointed out that the developing economies are suffering most from the global economic instability and demanded that developed countries come true to their previously made promises of helping developing countries. He also called for the need to launch a programme of action to protect the interests of net food importers to guarantee food security for these countries amid fluctuations in food prices.
Eissa also told conference participants that development and completing the Doha Round are of utmost priority for Egypt. He stressed that Egypt has no intention of overlooking 10 years spent on work related to this Round. He also affirmed that Egypt will neither agree to restart negotiations, nor include new issues that could derail the completion or success of the Round.
The Round, launched in 2001, is currently at an impasse according to WTO Director-General Pascal Lamy. Yet, he warned against an increasing tendency of protectionism in the face of the global crisis. He said protectionism could cost the world economy some $800 billion dollars, roughly the same value of all commitments made by current members at the WTO.
"A freer, fairer and more development- friendly trading system is part of the solution," Lamy argued. "Going-it-alone will make it more painful and longer," he said.
Making up for lost time
MOBINIL's new chief executive officer, Yves Gauthier, vows to improve services by greater investment into broadband services, writes Nader Habib.
Gauthier was appointed chief executive officer of the Egyptian Company for Mobile Services (Mobinil) in November 2011 by Board Consensus. He brings with him extensive experience in the field of telecommunications earned from various executive positions in multi-national operators around the world, including Orange.
Speaking during a roundtable with journalists, Gauthier admitted that services delivered in Egypt and the Arab world do not stand at a par with those delivered in Europe. He wants to change that and says it is possible if more investment is made into fibre optics, "so we can push the broadband technology. If we wish to employ the broad revolutionary Long Term Evolution (LTE), a technology that increases the capacity and speed of wireless data networks, we will need a full fibre optics network." At the moment though, he laments the fact that the Egyptian telecommunications market is not fully liberalised and only Telecom Egypt has the right to this network. "The alternative," Gauthier noted, "is for the company to build a 'Microwave' network, but that would provide a lower quality of broadband services."
Gauthier is not only intent on improving the company services but also its earnings which were badly hit in fiscal year 2010/ 11. One of the reasons for the drop in earning has been the decline in roaming revenues due to the fall in tourism in the aftermath of the revolution, he said. Moreover, calls for boycott of Orascom Telecom (OT) in the aftermath of a cartoon ridiculing Salafis circulated on the Internet by Naguib Sawiris, then OT Chairman and CEO, also affected earning. But Gauthier says "Mobinil is a company which belongs to France Telecom, and OT as one of its major shareholders. It is Orange France Telecom that is in charge of managing the company. Over and above, Mobinil is Mobinil and cannot be personalised. It is a company that is not into politics. It is a mobile operator whose goal is to serve all the citizens of the country, and I hope people will realise that."
Gautier hopes 2012 will be "a year of recovery", but adds that, "it will depend on what the situation of the economy is."