The annual inflation for October fell to 2.4 per cent, its lowest level since January 2007. Inflation had spiked to above 30 per cent in the wake of Egypt’s three-year International Monetary Fund (IMF) agreement in November 2016 which saw the flotation of the pound and cuts in energy subsidies.
The fall in inflation for the fifth consecutive month is expected to encourage the Central Bank of Egypt (CBE) to make further interest rate cuts when its Monetary Policy Committee meets today. The CBE has cut rates twice this year and most analysts expect a further one per cent reduction. Following the deal with the IMF three years ago the CBE had raised interest rates by seven per cent.
Inflation was not the only indicator of improvement. After years of growing at a sluggish two per cent, the economy grew by 5.6 per cent in the first quarter of the current fiscal year. The growth was driven by higher net exports and investments and historically high tourism revenues.
In fiscal year 2019-20, the GDP is expected to grow by 5.9 per cent, driven by the continued strengthening of the tourism sector and of exports, by large public construction projects such as the building of the New Administrative Capital and natural gas production from the Zohr field and other new discoveries.
Investment too is up, encouraged by the recent trend of interest rate cuts and the ongoing implementation of business environment reforms and prudent macroeconomic policies.
The headline achievements, however, seem to carry little weight with MPs who this week began discussing the government policy statement delivered by Prime Minister Mustafa Madbouli on 8 October.
Hearing sessions will be held until 20 November, when MPs will be asked to vote whether to renew confidence in the government or not.
Deputy Parliament Speaker Al-Sayed Mahmoud Al-Sherif told reporters that the priority during the debate and hearing sessions will be to assess whether the government has done enough to protect those on limited incomes from the impact of the three-year economic reform programme.
He said that though international financial and monetary institutions agree Egypt’s economic reform has been a success the positive results of the programme have yet to trickle down to the poor. Egypt’s poverty rate reached 32.5 per cent in 2018, up from 27.8 per cent in 2015. Five million Egyptians now live below the poverty line.
When Madbouli delivered his policy statement on 8 October he was showered with criticism from MPs who accused the government of pushing an unprecedented number of families into poverty.
“We hope to see a raft of initiatives in the coming period to help improve the living conditions of the poorest, and raise their incomes,” said Al-Sherif.
Kamal Amer, head of parliament’s Defence and National Security Committee, accused the government of not doing enough to contain inflation.
“Official figures show inflation falling yet citizens still complain of high prices, exorbitant electricity and water bills, corruption, and failing education and health services,” said Amer.
“Hostile television channels which incited citizens to protest on the street in September have been able to exploit economic problems and corruption in government circles.”
Bahaaeddin Abu Shoka, head of the Wafd Party and chairman of parliament’s Legislative and Constitutional Affairs Committee, is worried that Madbouli’s statement failed to mention a single word on political reform.
“The constitution is clear in stating that political reform, pluralism and peaceful rotation of power should be major cornerstones of the government’s policies yet what we have seen is these issues taking a back seat. They are not even on the government’s radar,” said Abu Shoka.
Abu Shoka complained that most government-drafted laws reach parliament late, with “the majority of crucial laws presented at the end of the parliamentary session, leaving little time for MPs to debate them.”
Alaa Abed, head of the Human Rights Committee, decried the government’s poor performance in responding to critical reports issued by foreign human rights organisations, including New York-based Human Rights Watch and London-based Amnesty International.
“The media attacks which targeted Egypt last month exploited the reports of these organisations to tarnish the image of Egypt,” said Abed.
In response, Minister of Parliamentary Affairs Omar Marwan said a number of cabinet ministries are involved in defending the human rights situation in Egypt.
“What is important to us is to respond to the UN Human Rights Council. Everyone knows the reports issued by Human Rights Watch and Amnesty International are politicised, aiming to serve specific agendas,” said Marwan.
Marwan left Cairo on Sunday for Geneva to attend the UN Human Rights Council’s (UNHRC) Universal Periodic Review session on Egypt. Mohamed Fayek, the head of Egypt’s National Council for Human Rights (NCHR), accompanied Marwan to the UNHRC session.
Marwan said the government had held a series of meetings with civil society organisations to review efforts to protect human rights ahead of the Geneva session, and that Egypt adheres to all its international human rights commitments.
*A version of this article appears in print in the 14 November, 2019 edition of Al-Ahram Weekly.