Ensuring value for money

Gamal Essam El-Din , Tuesday 5 Mar 2024

The Board of Trustees of the National Dialogue will hold a meeting this week to discuss a new batch of economic reform proposals to be submitted to President Abdel-Fattah Al-Sisi, reports Gamal Essam El-Din

Ensuring value for money



MP Talaat Abdel-Qawi, a member of the Board of Trustees of the National Dialogue, told Al-Ahram Weekly this week’s meeting will follow a new round of National Dialogue sessions that, at the request of President Abdel-Fattah Al-Sisi, would focus on economic issues. Late last January, Al-Sisi had called for the National Dialogue to reconvene in the light of ongoing economic challenges and the continuing shortage of hard currency.

As a result, said Abdel-Qawi, the National Dialogue held four closed-door meetings last week in the presence of cabinet ministers, economic experts and business leaders to discuss urgent economic issues. The first two meetings tackled inflation, monetary policy, the budget deficit and external debts, while the third and fourth meetings addressed public investment, tax policy, and social justice.

The closed-door meetings represented an attempt to forge a consensus among economists, ministers, and business leaders, with the aim of formulating an agreed set of recommendations to be submitted to the president, the House of Representatives, and government.

National Dialogue General Coordinator Diaa Rashwan explained that a general joint committee, including the heads of the dialogue’s economic subcommittees alongside cabinet ministers, will be formed to draw up an economic roadmap. Prime Minister Mustafa Madbouli said the formation of the joint committee shows that the government is serious about implementing the National Dialogue’s recommendations.

The National Dialogue’s Secretary-General Mahmoud Fawzi said the joint committee will also oversee the implementation of the dialogue first 129 recommendations for political, economic, and social reform.

According to Abdel-Qawi, new recommendations will include legislative reforms to address inflation, including by facilitating effective government intervention in the retail market, and promote social justice. The public has been demanding that the authorities clamp down on “greedy” traders and merchants who hoard key commodities in order to inflate prices and boost their profits.

Abdel-Qawi explained that there is optimism the new $35 billion Ras Al-Hekma deal between Egypt and the United Arab Emirates (UAE) will help address the dollar shortage and curb inflation. This ramifications of the deal were high on the agenda of the dialogue’s first closed-door meeting last week during which participants agreed the government should make use of the revenues to shore up foreign exchange reserves and stabilise the value of the pound.

The Ras Al-Hekma deal, inked on 23 February, has already resulted in the Egyptian pound strengthening on the parallel market. The US dollar was changing hands at LE53 on the black market on Monday, down from LE70 in January.

One recommendation agreed in last week’s closed-door meetings is that the government should act as quickly as possible to clear goods, especially food products and medicines, food manufacturing components and production inputs, stuck in Egypt’s ports, a move that will boost the supply of goods and commodities on the local market and hopefully lead to reduced prices. The release of production inputs would also help industries increase exports and thus generate foreign exchange revenues.

Samir Sabri, head of the dialogue’s Investment Committee, said the recommendations passed last week also covered the introduction of incentives to stimulate foreign direct investments.

While the Ras Al-Hekma deal, Sabri argued, sends very positive signals about the investment climate in Egypt, “the government needs to do more in other directions, such as offering greater tax incentives and eliminating bureaucratic obstacles standing in the way of industrial investors.”

Sabri also revealed participants in the closed-door sessions proposed drafting legislation that would place a cap on foreign borrowing and help rationalise public spending and had urged the government to accelerate the privatisation programme to cover Egypt’s foreign financing needs.

“Participants focused on the measures necessary to implement the State Ownership Policy document which aims to increase the private sector’s contribution to 65 per cent of the national economy,” he said.

Head of the National Dialogue’s Industry Committee Bahaa Demitri said the dialogue and the government agreed that the Unified Public Finance Law needed to be amended to narrow the budget deficit. Under the changes proposed, the budgets of all 59 of the state’s economic bodies and the state budget will be presented in a new consolidated budget, dubbed the Public Government Budget, introduced over a five-year period starting in FY 2024-25.

There were also proposals that so-called private funds be incorporated into the Public Government Budget.

“There are 90 private funds, and each has an independent budget. The anomaly needs to end and a comprehensive unified budget introduced as part of the much needed budgetary reforms,” said Demitri.

* A version of this article appears in print in the 7 March, 2024 edition of Al-Ahram Weekly

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