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Tuesday, 10 December 2019

Is borrowing a way out?

Egypt's government lacks broad strategic thinking and vision on the economy

Nader Bakkar , Friday 22 Feb 2013
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Views: 1231

In its present state, the government is living through a condition that can be defined as “a state of uncertainty.” 

This state does not authorise it to cut any long-term deals, on top of which comes borrowing. 

I dare say that such cases had better be kept under the control of an elected government that is monitored by an elected house of representatives.

What is even more dangerous is that proper management requires having an overall vision before attempting partial actions. 

But until now, we have not seen from the government of Prime Minister Qandil any integrated or specific economic vision that borrowing (being a partial policy) forms an intrinsic part of, whether we get this loan from Europe or Saudi Arabia. 

In addition, we are borrowing from an international political entity the size of the IMF. Even if we set aside all the ongoing talks about how the IMF adjusted its policies after the 2008-financial crisis, the unchangeable rule will always be that a loan is a burden on any country, whether that burden is in the form of a financial obligation, restriction of political decisions or anything more ominous. 

In addition, our present situation does not give us the leisure to bank on the goodwill of others.

I have repeatedly suggested that the government should launch a collective workshop for all Egyptian economic experts (inside and outside the country) from all the schools of economics (Islamic, capitalist or leftist) to help us collect different views and come up with creative solutions that can get us out of the limited box of clichéd and classic solutions used for solving liquidity and financial problems. 

We need to survey all our options before we can acknowledge “borrowing” as our only way out.

I distinctly remember how Mahathir Mohamed, former prime minister of Malaysia, formed a national council that included the biggest investors and economists from various affiliations during the time of the excruciating economic crisis that almost ravaged his country. 

He convened the council for two whole years and conducted daily sessions for hours until he was able to get Malaysia out of its slump. 

A decision that can impact the future of a country politically and economically can never be the task of a single entity, no matter how ingenious that entity is.

It is true that approving a loan by the IMF will have a positive impact on raising the credit rating of Egypt, which will consequently translate into growing global confidence in its economy and hence attract more investments, but whoever said that this was the only way to do it? 

This is yet another stereotypical way of thinking that can be easily broken out of, if Egypt adopts a distinguished diplomatic role in the coming days, through which it can venture down new paths and build new strategic foreign relations.

I am still interested in focusing on the broad strokes, but it is always okay to bring up some options that are worthy of considering and studying. 

One of these options is to open the door for funding infrastructure projects using the build–operate–transfer (BOT) system, on condition of having sustainable development which will ensure the preservation of the country’s assets and its people’s rights. 

Another option is to allow Egyptians living abroad to inject more foreign currency liquidity into the country.

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