Majority bloc in Egyptian parliament supports pound flotation and fuel subsidy cuts

Gamal Essam El-Din , Saturday 5 Nov 2016

The Support Egypt bloc said floating the pound and cutting down fuel subsidies were a long-awaited and postive economic reform step

File photo of Egypt's Parliament in session. (Photo: AFP)

The Egyptian parliament's majority bloc Support Egypt announced in a statement Saturday that it fully supports the government's new IMF-inspired economic reforms; primarily floating the pound and increasing fuel prices.

“These reforms were inevitable and should be the beginning of comprehensive economic reform,” read the statement.

According to the statement, freeing the exchange rate of the Egyptian pound and cutting down fuel subsidies should improve the country's public finances, counter ineffective bureaucracy, and create a more favourable investment climate.

“This government's long-awaited reform reflects a high sense of national responsibility,” said the statement.

The Central Bank of Egypt devalued the Egyptian currency onThursday by 32.4 percent to EGP 13 to the dollar, down from EGP 8.78, saying that banks will be allowed to set the rates of the US currency as of Sunday. 

However, Mohamed El-Sewedi, head of the Support Egypt bloc and chairman of the General Federation of Egyptian Industries, told reporters Saturday that “businessmen, industrialists, and merchants should not view these decisions as a new opportunity to raise the prices of goods.”

“These sectors should show a high sense of social responsibility and refrain from raising prices,” said El-Sewedi, adding that “fuel prices were increased by between 2 percent and five percent only, and this should not give an excuse to the business and the commercial community to raise prices of goods and services.”

On the other side, El-Sewedi, an electric cable tycoon, has recommended that the salaries of state employees who receive less than EGP 2,000 per month be raised.

“This is a necessity to guarantee that this sector of employees can sustain an honourable life,” said El-Sewedi.

El-Sewedi said it is important that Prime Minister Sherif Ismail hold a press conference to explain the new economic reforms to citizens and underscore the government’s commitment to social justice.

“Without explaining the country's economic conditions in a transparent way as well as consulting with ordinary citizens, the parliament and the business community at all times, any more reforms might not receive the necessary political backing,” said El-Sewedi.

El-Sewedi also said that civil society organisations should be mobilised to play a positive role in raising the awareness of citizens in all of Egypt's governorates of the importance and inevitability of economic reforms.

“The role of civil society organisations and the media is to build bridges with citizens in all of Egypt to explain the facts and conduct dialogue with all sectors of society in a transparent and objective way,” said El-Sewedi.

The Support Egypt bloc was formed and officially recognised in parliament in May 2016 as the majority coalition, including 317 MPs (52 percent).

It comprises 216 independents and 101 MPs affiliated with seven political parties.

El-Sewedi said the political bureau of Support Egypt will hold a press conference tomorrow to defend its support of the new package of economic reforms and answer questions.

The reaction in parliament to the government's new IMF-inspired reforms has varied greatly among the remaining MPs.

The leftist bloc entitled 25-30 group and the ultraconservative Islamist Nour Party have publicly announced their rejection of the reforms.

While the 25-30 group said the new wave of liberalisation policies will negatively affect poor and limited-income classes, the Salafist Nour said new decisions are the result of pressure from the IMF and will rather exacerbate – rather than solve – Egypt's economic crisis.

“Egypt needs a local economic reform programme based on fighting corruption and tax evasion rather than borrowing money from the IMF,” said the Nour Party in a statement.

Three major political parties in parliament – the Free Egyptians Party, the Future of the Nation and El-Wafd – have also announced Saturday that they will meet and hold press conferences to address the new reforms.

A number of MPs have asked parliament speaker Ali Abdel-Al to hold an extraordinary plenary session on Sunday to voice their concerns about the new reforms.

Parliament's secretariat-general said Saturday that there will be no extraordinary sessions on Sunday, but parliament's committees can meet any time to review the new decisions and issue recommendations. 

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