As Egyptians are celebrating their new- found freedom, the economy is at a crossroads. The events of the uprising, toppling the previous regime and vagueness of the future have stripped, and are still stripping Egyptians of much needed sources of income.
Working with successive Egyptian governments during the last 20 years to eradicate poverty, fight corruption and improve basic services, the World Bank (WB) expressed its readiness to help the new government to deal with challenges ahead.
Shamshad Akhtar, WB vice president for the Middle East and North Africa visited Egypt last week where she met with the prime minister, minister of finance, minister of planning and international cooperation and separately with the governor of the Central Bank and the minister of social solidarity. Ahram Online discussed with Akhtar the outcomes of the visit
Ahram Online: With the Egyptian economy losing billions of pounds since the outbreak of the uprising, what kind of assistance or support is the World Bank offering at this point? Are there any new projects, loan or grant agreements finalised?
Shamshad Akhtar: At this stage, the World Bank and various stakeholders in Egypt have had a number of consultations on possible types of support that could be provided. Along with other development partners, the bank stands ready to provide financial and technical support to Egypt. Details on amounts and modalities are being worked out.
The bank has offered to help strengthen the economic governance regime through budgetary support, and to help develop and implement the government's proposed national employment and social safety net programmes.
We also discussed how to adapt the existing portfolio of bank-financed projects to the government's new priorities and then potential areas where we can provide quick additional support to Egypt in the short term.
AO: The Egyptian business sector is worried about the leanings of the post-revolution government as they feel it would favour the social aspect on the expense of open market and free economy principles. To what extent do your meetings prove this change of heart and how would this change your development plans in the local economy?
SA: We had a good meeting with the private sector representatives. They underscored the need for more security from the state so they can conduct their operations in a smooth and productive way. In order for the private sector to work efficiently, it is hugely important that the state provides good overall security.
Yes, certain segments of the private sector will be challenged by forces unleashed by the revolution. And the new government certainly has a difficult job ahead to create a safe space for the private sector to create more and better jobs. Nonetheless, over the last 50 years, Egypt has made great strides towards opening up its economy to free trade inside and outside the country.
Now is not the time to turn back. On the contrary, it is the time to open up greater opportunities, particularly in the smaller enterprises that could easily become the driving force of Egypt's economic future.
AO: The roots of the people's anger, the main triggers of the uprising, include the elevated poverty rates and the widespread corruption. I understand that an integral part of your mission in Egypt for the last 20 years has been to fight both, so what went wrong in your opinion? Why did we fail to end, or even contain both problems, and why has the trickle-down effect never happened? Also, why are we still discovering everyday big corruption scandals?
SA: The WB has been tracking growth and poverty in Egypt for many years.
It is true that poverty remains painfully high, particularly in some of the less developed parts of the country. It is clear that previous governments could have done more to promote development, growth and jobs in Upper Egypt, for example. It is also clear that a bigger push on decentralisation could have helped deliver better social services in poorer areas.
As for corruption, while the bank has played a leading role worldwide for many years in promoting better governance, more transparency and better institutions, we hope that in this new environment the bank can have greater opportunities to support better governance in Egypt, drawing from its work which could not be implemented due to hesitancy in the past to pursue this agenda with the bank.
Fortunately, there were some notable exceptions such as the progress that Egypt made in improving its Doing Business ratings compared with its competitors.
However, we still have numerous governance-related reports whose recommendations are still valid. Now that Egypt has a new government for which transparency and accountability are the central planks of their platform, we look forward to providing them with the best possible advice based on our extensive knowledge of reform experiences in many other countries around the world.
AO: The Arab region as a whole, starting with Tunisia, Egypt, Libya and most recently the Gulf countries, is facing many political changes. This would change the scene captured by the global economic prospects 2010 about the expected growth in the region. What are your expectations in this regard?
SA: Given that the situation in the Middle East is still evolving rapidly, it is hard to say with any precision what the outcome of these developments will be for the region as a whole, or more specifically for Egypt.
As we speak, the political outcome in Libya remains very uncertain, including the possible impacts on remittances and the cost of re- integrating Egyptians returning home. At a larger, macro- level the impact on world oil prices remains a worrisome uncertainty.