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Egypt: Observations on the government’s program

Ziad Bahaa-Eldin , Wednesday 6 Apr 2016
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The government presented its program in parliament last Sunday, thus complying with Article 146 of the constitution, which for the first time makes the continuation of the government conditional on parliamentary approval of the program within 30 days of submission—in this case, before April 26. 

The House will likely approve the program to avoid a constitutional crisis that could end with its dissolution and new elections, but I’d still like to offer some general observations on the program, in the hope of contributing to the debate.

First, the government did not present a comprehensive program so much as a set of discrete economic projects.

Although the program document promises to outline the government’s vision on seven major issues—national security, democracy, economic development, social justice, basic infrastructure, administrative reform, and international relations—virtually the sole topic addressed was socioeconomic programs and megaprojects, which took up 150 of the document’s 200 pages.

National security and democracy were covered in the most abstract terms in just three pages each. This reflects the fact that this is exclusively an economic government.

It also suggests that the state continues to view the economy from a purely technical perspective, unrelated to politics, even though the country’s economic crisis cannot be resolved in isolation from a sound political framework.

Second, even from the economic perspective and despite the many graphs and statistics littering its pages, the program document doesn’t actually offer a concrete articulation of the state’s future course. Instead, it is a detailed accounting of projects the government intends to carry out.

On page 36, the program says that the government will work to make the Egyptian economy “a disciplined market economy characterized by macroeconomic stability and able to achieve inclusive, sustainable growth.”

But such grand pronouncements raise more questions than they answer, about the state’s role in economic development, the future of the public sector and the role of the private sector, necessary institutional reforms, public spending priorities, and the development of state administration.

Third, and more worryingly, are the inconsistencies, if not contradictions, between the social and economic dimensions of the program, which gives the impression that two different governments wrote these sections.

The economy government seeks to restore fiscal balance and reduce the deficit in the coming two years to 9 percent, which requires raising taxes (VAT and property taxes), as well as cutting energy subsidies and freezing government wages.

Meanwhile, the social government favors a broad expansionary policy, promising additional spending in housing, health, education, youth, culture, and local development, which requires resources far exceeding projected revenues.

Add the proposed megaprojects to this spending, and I don’t see how these contradictory targets can be achieved.

The fourth observation relates to proposed megaprojects. Instead of explaining the logic behind the choice of these projects, dozens of pages are spent describing their engineering ins and outs.

For several of the projects, no mention is made of cost, sources of financing, expected returns, nature of ownership, governance, or the role of the state and private sector in implementation.

Fifth, the program unfortunately adheres to the same unsuccessful investment policy of the last two years, with talk of implementing the investment law issued last March, revolutionary new procedures, and an end to all obstacles.

But ignoring the very real problems and impediments to investment is what brought us to current sluggish growth and an inability to unleash productive energies, create jobs, and increase exports.

Still, I hope that the new investment minister, appointed just two days before the program was announced, has different ideas and a willingness to change this failed course.

The sixth observation concerns social justice. The document presented to parliament promises increased spending on public services and proposes several social security programs.

The clearest and most coherent are the Karama program for the protection of the elderly and disabled and the Takaful program to protect the poorest families. While welcome, these measures do not amount to social justice.

Protection is one thing, justice another. The first means providing pensions and benefits to society’s most vulnerable and attempting to lift them out of abject poverty—a necessary end. In contrast, justice means working to address the underlying causes of the growing gap between rich and poor.

If giving the very poor additional support is a worthy project in the current economy, giving their children education and job opportunities is key to ending the cycle of poverty itself. This conceptual shift from protection to social justice is what’s missing from the government’s program.

Finally, there is the issue of education. Although I didn’t intend to look in detail at any public service given the lack of space, passing over education is impossible.

Everyone agrees that reforming the education system in Egypt should be the government’s number one priority, but the program offers virtually no new idea or serious initiative or even attempt to change the status quo.

In fact, the eight pages devoted to education in the program nearly all start with the phrase “continue to” or “complete,” as if current policy is ideal and requires not even minor tweaks. This is unacceptable.

The state cannot be preoccupied solely with building roads, bridges, and new cities without attempting to make any genuine improvements in education.

Ultimately, the government’s program is less a unified statement of purpose than an aggregation of each ministry’s planned programs and projects.

I fear this can’t be chalked up to poor editing, but instead reflects a lack of coordination and agreement between ministries and various state bodies—the exact thing we most need today.

*The writer holds a PhD in financial law from the London School of Economics. He is former deputy prime minister, former chairman of the Egyptian Financial Supervisory Authority and former chairman of the General Authority for Investment.

This article was published in Arabic in El-Shorouq newspaper on Monday, 4 April.


 

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