Political scientist Huwaida Adly has assessed the impact of Egypt’s economic reform programme undertaken since November 2016 with the backing of the International Momentary Fund (IMF) on a society already suffering from major disparities in income and living standards before the programme’s implementation, reports Aziza Sami.

The aim of the economic reform programme was to rectify fiscal and balance of payment anomalies. It also aimed to improve growth rates, employment, provide better social protection, and improve living standards.

While the IMF has said that Egypt has succeeded in completing the economic reform programme, it has also underscored the importance of improving the mobilisation of resources in order to create more expenditure on healthcare, education and social protection, Adly said in her study.  

This indicates that in the IMF’s assessment the weak point in Egypt’s economic reform process relates to social expenditure and social protection. There is also a danger that both the IMF and the government reduce the question of social equality to one of merely providing better social protection, she added. 

Adly’s study gives statistics regarding poverty in Egypt, showing that poverty levels have risen to reach 32.5 per cent in 2017-18, up from 16.7 per cent in 1999-2000. Extreme poverty levels rose from 2.9 per cent in 1999-2000 to 6.2 per cent in 2017-2018. The rise was interrupted in 2010-2011, when poverty levels dipped to 4.8 per cent and to 4.4 per cent in 2012-2013.

The distribution of poverty by geographical region indicates even greater disparities, according to the study. The only reduction in poverty levels occurred in rural Upper Egypt, where poverty was 51.94 per cent in 2017-2018, down from 56.7 per cent in 2015. However, poverty levels in Upper Egypt still remain among the highest in the country, with 40.3 per cent of Egypt’s poor residing there.

Poverty levels have risen in all the country’s geographical regions over the past two years. Rural areas saw a rise in poverty levels from 35.95 per cent in 2015 to 38.39 per cent in 2017-2018. The increase was sharper in urban areas, rising from 15.11 per cent to 26.37 per cent in the same time period.

Manifestations of poverty include an increase in family members, more limited education, the scarcity of food, and working in the informal sector. People who fall into the poverty bracket are often deprived of basic rights, such as the rights to education, healthcare and employment.

The groups hit hardest by these factors are women, children, young people, and the disabled.

The narrowing of the definition of social protection on the part of the IMF and the relevant government institutions does not serve the public interest, Adly argued in her study. State institutions that aim to reduce poverty will not achieve this by social protection nets alone, and poverty rates will likely rise with the financial burdens shouldered by the state.

Social protection nets do not comprise methods of empowerment, she said, and it can be argued that social protection alone is not conducive to realising true social equality.

Social equality means the equitable distribution of income and resources to which wage and taxation policies remain central. It should include reforms to health insurance, pensions, and employment conditions.

The attainment of social equality will thus require structural and institutional changes to how expenditure is prioritised and how policies are determined, Adly said. She recommended that priority be given to education, healthcare, and employment, with policies implemented to make these things more widely available and to improve their quality. 

Radical reforms to the wage system are also called for, she said, and labour rights need to be properly implemented, especially those pertaining to women.

Adly recommended looking at the example of Uruguay, which has introduced cash transfers to poorer families as well as temporary employment and training. Poverty levels in Uruguay were reduced from 32 per cent in 2004 to around 18 per cent in 2010 as a result of economic policies whereby real wages were raised by 18 per cent over four years.  

A new taxation system implemented in 2007 reduced direct taxation, including the value-added tax on food and other items.

*A version of this article appears in print in the 12 December, 2019 edition of Al-Ahram Weekly.