Egypt: Ambiguous economic map

Published on Al-Aham weekly online, by Sherine Abdel-Razek, May 15, 2014.

The presidential poll will take place before a backdrop of economic woes. The budget deficit has ballooned. There is a deep-rooted energy crisis and foreign investors continue to give Egypt the cold shoulder. Unemployment and inflation are compounding already high levels of poverty in a country whose population — emboldened by two revolutions — is unlikely to shy away from taking to the streets.

So what are the candidates promising on the economic front?  

While Hamdeen Sabahi has issued an 81-page manifesto Abdel-Fattah Al-Sisi, far and away the favourite, hasn’t revealed his plan yet. The reason? “So as not to raise a lot of unnecessary debate,” according to his campaign team.

“The whole country knows Al-Sisi will be the next president. Economists realise recently introduced economic policies have been tailored to make his task easier. So why put out a plan now?” asks Omar Al-Sheneety, Managing Director of Multiples Group, a regional private equity firm.

On the basis of economic policies pursued in the last nine months, many observers anticipate an expansionary policy financed by Gulf aid. What they are not expecting are measures — like the wholesale cutting of subsidies — that might stir instability. Given that Al-Sisi enjoys the backing of the business community, analysts also expect the private sector to be given a broader role in the economy.

In contrast Sabahi promises a restructuring of the public sector, with greater prominence given to cooperatives, a stronger focus on small and medium-sized businesses and greater dependence on local sources of finance.

Sherine Al-Kadi, Chairman of Prime Holding, a leading investment bank, feels that the received wisdom may well be wrong. “What has been revealed of Al-Sisi’s economic plan so far has been a surprise. We expected a continuation of the capitalist paradigm but he appears to support a wider role for the state.”

In two televised interviews Al-Sisi called for a greater role for the state in planning, investment, production and even in market surveillance. He asked Egyptians to “tighten their belts, share sacrifices and be patient until things improve”. Improvement, he predicted, will take two years.

“Neither candidate’s programme offers much in the way of policy steps that will enable them to meet their promises. There’s a lot of rhetoric but precious few details,” says Heba Khalil, deputy head of the Egyptian Centre for Economic and Social Rights (ECESR).

“Take unemployment. When 13.9 per cent of Egyptians are jobless Al-Sisi’s suggestion that thousands of young people be provided with carts so they can sell vegetables and meat hardly constitutes an employment strategy.” … //

… A majority of businessmen support Al-Sisi, says Al-Gazaierly, because “he brings the promise of stability and has a track record over the last nine months of sending positive messages to investors about the future.”

While Sabahi is promising workers a larger role in the economy, and has said he will re-nationalise some privatised companies, Al-Sisi has made it clear in interviews he has little patience with workers’ demands. The government doesn’t have the money to cover them, he told viewers.

“I am afraid Al-Sisi will continue the repression of labour. Recent legislation criminalising strikes is anything but positive,” says Al-Gazaierly. (see pp. 2-4)

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Link: Expats have their say, on Al-Aham weekly online, by Doaa El-Bey, May 15, 2014.

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