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Monday, 14 October 2019

Government will not backtrack on IMF-inspired reforms: Egypt parliamentary affairs minister

Gamal Essam El-Din , Sunday 6 Nov 2016
Views: 3369
Views: 3369

Egypt's Minister of Parliamentary Affairs Magdi El-Agati said on Sunday that it is “quite impossible” for the government to backtrack on the controversial economic decisions announced last week, which include liberalising the exchange rate and lifting fuel subsidies.

El-Agati also said in his statement before parliament's energy and environment committee that new measures will be taken in the coming few days to minimise the negative effects of the reforms on the poor.

“These decisions are final, and no one should think that prices would go down if the government chooses to backtrack on them,” said El-Agati.

Egypt reached a staff-level agreement with the International Monetary Fund (IMF) in mid-August on a $12 billion fund facility over three years, which is currently awaiting approval by the fund's executive board.

The IMF has endorsed Egypt's fiscal reform programme, which the government embarked on in 2014 in an attempt to curb the growing state budget deficit, estimated at 11.5 percent of GDP in 2015/16.

The programme has included cutting subsidies and the introduction of new taxes, such as the newly ratified value-added tax.

On Thursday, the IMF welcomed Egypt's central bank decision to float the country's pound, saying that it would “boost competitiveness and attract foreign investment.”

El-Agati did, however, apologise that the new IMF-inspired economic measures came as a surprise to parliament.

“We did not inform parliament in advance of these measures – especially cutting down fuel subsidies – in order to safeguard citizens against any monopolistic practices on the market,” said El-Agati.

“All I can say is that the government and provincial governors are currently coordinating to help citizens absorb the shock of new economic measures,” said El-Agati.

El-Agati urged MPs to support the government in its new economic policy aimed at fighting monopolies and cutting down subsidies.

“The current government decided to bear the responsibility of issuing difficult economic decisions, and you should help it because we are all in one boat,” said El-Agati, adding, “does anyone imagine that Egypt can live without reforms?”

“We could be a nice government that will issue decisions that every citizen will like, but this will only lead us in a dangerous direction, and this is why the current government chose to go the way of painful reforms,” El-Agati said.

He also stressed that up to 70 million Egyptians hold ration cards.

“I think no government in the world can afford the costs of these cards, especially since many use them to get access to subsidies that they do not deserve. The government insists that the subsidy system should be completely revised so that those who only deserve subsidies get them," he stated. 

Responding to questions by MPs, El-Agati said the policy statement delivered by the prime minister before parliament last March showed in detail the government’s intention to cut down fuel, electricity and water subsidies.

“This statement gained the approval of the majority of MPs, so I insist that the new economic decisions were not a surprise,” said El-Agati. “We just refrained from informing you of when they would be implemented,” said El-Agati.

MPs insisted, however, that they were both surprised and shocked by last week’s "harsh economic decisions."

“These decisions left us a prey to insults from our constituents on Facebook,” said MP Abdel-Sallam El-Khadrawi, adding that “citizens have said that it is a big shame that MPs were the last to know about these decisions.”

MPs also said that since the government insists that it will go a long way in implementing the IMF-inspired measures, it should inform them as soon as possible of its policies aimed at protecting the poor.

“You should consult with us rather than export problems and crises to us,” said MP Sayed Hegazi.

Leftist MP Diaaeddin Dawoud accused the government of doing everything possible to satisfy the IMF and anger MPs.

“We want to help you, but you do not want to help us by informing us of your decisions in advance,” said Dawoud.

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