Monday,16 July, 2018
Current issue | Issue 1289, (31 March - 6 April 2016)
Monday,16 July, 2018
Issue 1289, (31 March - 6 April 2016)

Ahram Weekly

No sweeteners with PM’s bitter medicine

Prime Minister Sherif Ismail presented MPs with a bleak assessment of the state of the economy, reports Gamal Essam El-Din

Al-Ahram Weekly

Parliament will begin reviewing the government’s policy statement next week, following its presentation by Prime Minister Sherif Ismail on Sunday. A 50-member committee, headed by Deputy Speaker Al-Sayed Al-Sherif and composed of representatives from all political forces, has been formed to oversee discussion of the statement.

Article 146 of the 2014 Constitution stipulates that the government’s policy statement must be debated within 30 days of being delivered. Following the debate the House then votes on whether to grant or withhold confidence in the government.

The 50-member committee will prepare a report on Ismail’s statement, to be referred to the house within two weeks. Following the referral, MPs will debate the statement in plenary sessions.

The statement was delivered after 10 ministers were replaced in a 23 March cabinet reshuffle. Speaker Ali Abdel-Aal told MPs he received a letter from President Abdel-Fattah Al-Sisi informing him that the president had appointed Ismail as prime minister and expressing the hope the government’s programme — the text of the statement runs to 205 pages — secures the confidence of MPs.

Should the policy statement not be approved by MPs within 30 days the president is constitutionally obliged to ask the majority party or coalition to name another prime minister. If the new prime minister then fails to win a majority within the House, parliament itself is dissolved.

Ismail, when he delivered the statement, told MPs that he wanted to be candid about the challenges facing Egypt. The country, he said, is suffering from a severe economic crisis that began in 2011 and that everyone must work hard to overcome it.

“We are in a state of danger though there are some signs that give us a glimmer of hope about the future of the economy,” Ismail said.

“But for Egypt to reclaim a leading role ... will require a change in our style of ‎thinking. We are facing a battle for survival. We have to move forward. The ‎status quo is indefensible and there can be no return to earlier times.”

Egypt still faces enormous threats to its national security, “from countries around us like Libya, ‎Palestine, Sudan, Iraq, Syria and Yemen and also from within, in the form of homegrown terrorism and ‎extremist thoughts.”

 Ismail reminded MPs that Egypt has one of the world’s highest rates of population growth.

“The population increased from 77 ‎million in 2009-2010 to 90 million in December 2015. At ‎‎2.6 per cent Egypt’s population growth rate is eight times that of South Korea and four times that of ‎China.”The prime minister told MPs that unemployment increased from nine per cent in 2009-2010 to 13.3 per cent ‎in 2015-2016, with those aged between 15 and 29 years ‎the worst affected.‎While acknowledging that Egypt has seen an alarming deterioration in public services Ismail said, ‎‎“We do not have the money to invest in improving these services.”‎

He continued, “Combined with one of the highest rates of population growth is sluggish economic growth. While the population is increasing by more than 2.5 million annually, economic growth has slowed to 4.2 per cent.”

Ismail attributed the slowdown to “a severe decline in sovereign revenues from sources like the Suez Canal and ‎tourism”.Ismail noted, however, that “spending on defence has dramatically increased ‎to meet the needs of Egypt’s national security challenges”.‎

He told MPs that inflation has soared to between 10 and 12 per cent, negatively affecting the ‎lives of poor and limited-income citizens who must now spend most of their income on food. The budget deficit hit 11.5 per cent of GDP in 2014-2015 and interest payments on ‎debt accounted for 26 per cent of public expenditure in 2014-2015.

“The government’s subsidy bill has increased from LE93.6 billion in 2009-2010 to LE188 billion in 2013-2014,” said Ismail. “Seventy-five per cent of the budget goes to salaries and subsidies, leaving just 25 per cent for infrastructure projects and public services.”‎

Continuing his bleak assessment of the state of the economy, Ismail said foreign debt had risen from $33.7 billion in June 2010 to ‎‎$48.291 billion by the end of January 2016.‎

“Tourism revenues declined from $10.6 billion in ‎‎2010-2011 to $7.4 billion in 2014-2015. Egypt’s commodity imports soared to $61 billion in 2014-2015 while exports dropped from $27 billion in 2010 to $22 billion ‎in 2014.‎”

In response to the challenges facing Egypt ‎Ismail said his government has developed a two-year, seven-point programme of reforms that will safeguard national security, reinforce democratic infrastructure, introduce economic reforms, improve infrastructure and promote social justice.

“This is a ‎programme that is supposed to end in June 2018. We hope, in collaboration with parliament, to ‎implement it,” said ‎Ismail.‎Ismail also pledged administrative reforms that would ensure greater transparency, ‎less corruption, and enhance Egypt’s role in Arab, African and world affairs.

The government will also adopt a preventative role against extremism.

“We will step up cooperation with Al-Ahzar to reform religious discourse to ‎reflect the tolerant values of Islam,” said Ismail. “The government will also do its best ‎to streamline police and military forces in light of the dangers coming from Libya, Syria, Yemen ‎and Iraq.‎”Ismail said his government respects the goals of the revolutions of 25 ‎January 2011 and 30 June 2013 and is committed to turning Egypt into a democratic state based on respect for ‎human rights and the rule of law. To achieve these ideals Ismail said his government will foster ‎a vibrant civil society, grant more freedoms to political parties and issue media laws in ‎line with the new constitution.‎MPs and commentators were divided in their reactions to Ismail’s statement.

Hala Al-Said, dean of Cairo University’s Faculty of Economics and Political Sciences and an appointed MP, told reporters, “Ismail presented an accurate picture of economic conditions”.

 “The first step on the path of helping Egypt’s ailing economy recover is to diagnose its chronic condition so the necessary medicines can be prescribed. This is what Ismail’s statement has done.”

He continued, “The medicine might be bitter but it is necessary to cure the disease.”

“Ismail’s statement was purely technical. It contained no political finesse,” said economic analyst Abdel-Khaleq Farouq.

“Like all prime ministers under the 30-year-rule of former president Hosni Mubarak, Ismail came to parliament to deliver a routine report. But it is no longer enough simply to prescribe a bitter medicine. You need to be enough of a politician to be able to persuade people to take the medicine without complaint. This is what Ismail did not do.”

 Ismail’s painting of such a bleak picture of the economy was an attempt to justify government moves to phase out subsidies and raise the costs of public services, said Farouq.

“Basically, Ismail told MPs his government has no money to spend on new projects or to improve services so they have two choices: either approve phasing out subsidies or maintain the frustrating status quo.”

Ismail said his government is targeting economic growth rates of between five and six per cent by the end of fiscal year 2017-2018 — the last year of Al-Sisi’s presidential term in office — and aims to cut the budget deficit from 11.5 per cent of GDP to eight or nine per cent. He also referred to the introduction of a value-added tax (VAT) and the reduction of subsidies.

Many MPs were surprised that Ismail’s delivery of the government’s policy statement was not broadcast live on television.

“A live broadcast wasn’t allowed because the authorities know Ismail and his government enjoy little, if any, popularity among the public,” said independent MP and political analyst Samir Ghattas.

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