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Egyptian business circles welcome cabinet's new economic team

Economic commentators are cautiously optimistic as the cabinet reshuffle replaces two of the four ministers in charge of the previous government's 'hesitant' economic policy

Ahmed Feteha, Thursday 21 Jul 2011
Four ministers
Cabinet's Economic Group: from left to right, Gouda Abdel Khalek, Mahmoud Eissa, Hazem El-Biblawi and Fayza Aboul Naga
Views: 3103
Views: 3103

The economic team in Egypt's newly appointed cabinet has the near-impossible mission of satisfying a long list of grievances. 

Protestors returned to Tahrir Square two weeks ago demanding, among many other things, quick fixes to the economy that would improve the living standards of the majority of the population.

The ruling Supreme Council for Armed Forces (SCAF) responded with a comprehensive cabinet reshuffle, playing the card of economic restructuring and hoping that hardline protesters could be pacified through changes in the executive arm.

The cabinet reshuffle replaced two of the four ministers responsible for economic policy.

Mahmoud Eissa was appointed to the Ministry of Trade and Industry and Hazem El-Biblawi to the Finance Ministry. Fayza Aboul Naga remained in charge of the Ministry of Planning and International Cooperation while Gouda Abdel Khalek remained with the Ministry of Social Solidarity.

With diverse professional histories, the four ministers also come from very different points on the ideological spectrum.  

While El-Biblawi is a well-known liberal economist, Gouda Abdel Khalek is a hardcore leftist. Both however, were very critical of Mubarak's economic policies.

Aboul Naga comes from the diplomatic sphere; Eissa is an experienced bureaucrat who spent most of his career heading public institutions.

"The economic group of ministries will have to coordinate their work in order to achieve success. I expect Hazem El-Biblawi to be very influential in shaping economic policy in the coming period," comments Magda Qandil, head of the Egyptian Center for Economic Studies (ECES).

Qandil, however, downplays the significance of the cabinet reshuffle.

"What we missed in the last cabinet was the political will; the problem was never the individuals," she adds. "We need the new officials to work towards proper implementation of plans instead of just handing out promises of prosperity."

The former cabinet faced much criticism, with many saying it was hesitant to take drastic decisions for fear of the public's response. The press described its performance as marked "shaky hands", which extended to banks and other public enterprises.

"We need a clear plan with specific objectives to be able to judge the cabinet," says Wael Khalil, a leftist activist.

Egyptian public officials have in the past been reluctant to present specific plans to the public.

The new cabinet which only has three months before elections, is faced with challenges both economic and political. 

Foreign debt and the budget deficit, unemployment and inflation; these constitute just the tip of the iceberg that is Egypt's economic hardship.

Khalil says the cabinet should implement time-bound policies in its remaining six months that would fulfil the demands of the revolution.

Economic policies, however, are unlikely to drastically change as the 2011/2012 state budget has already been approved. The new finance minister announced early on that the budget will not be amended despite calls by several political groups to scrap it.

These groups, which include the majority of leftist coalitions and parties , slammed the budget as "not meeting the revolutions aspirations", especially when it came to social justice and reforms to subsidies.

The budget included provisions for a new minimum wage for public sector employees but negligible increases in social spending.

A new capital gains tax was quickly scrapped after it met strong objections from business lobbyists.

Calls for implementing a progressive taxation system which could in theory reduce the gap between rich and poor have also been ignored.

Egypt's budget deficit reached LE134 million or 8.6 per cent, down from an initial 11.1 per cent in the budget draft. Little is known about the budget cuts, but pensions and unemployment assistance were among the items that were reduced.

Legitimacy questioned

Some observers  question the legitimacy of post-Mubarak cabinets to undertake major policy decisions given that they have not gained their power through democratic choice.

"The former cabinet acted as if it had no legitimacy," Qandil asserts. "[The cabinet] could have involved civil society institutions in a major way in its decision making process in order to gain legitimacy."

Also, the cabinet's interim status – only lasting till November - raises concerns about its ability to implement effective policies in such a short period.

Yet some have expressed optimism about the new appointments and their expertise.

"This [cabinet] marks a new era in governmental performance, for the first time we have ministers that are qualified, experienced and publically accepted -- at least most of them," says Farid Khamis, head of the Egyptian Investors Federation.

Khamis, also the chairman of Oriental Weavers, the world's largest rug-maker, is pleased  with the appointment of Mahmoud Eissa as industry minister.  "Eissa has stood for Egyptian industry over the years and has very strong views on protecting and supporting local industry," he explains.

Eissa has wide practical experience in the industrial field, having served as the head of the National Institute for Quality before his recent appointment. 

He was also the chairman of the Egyptian Committee on Consumer Policy of the International Organization for Standardization (ISO) and also served on the board of directors for several Egyptian public industrial enterprises.

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