A brief account of the economic landscape

Ziad Bahaa-Eldin
Wednesday 7 Sep 2022

Ziad Bahaa Eldin sums up the current situation


For a few weeks the cabinet reshuffle followed by the appointment of the Central Bank governor have dominated economic discussions. However, notwithstanding the importance of both matters, the economic landscape is made up of other equally elements which should be taken into account when assessing the current situation and options for the future:

The ministerial reshuffle announced on 13 August and including 13 ministers was limited in its economic side to four ministries: Industry and Commerce, Public Business Sector, Tourism, and Labour. This sent a worrying signal that no major change is to be expected in the government’s management of economic file.

As for the appointment of Hassan Abdallah as a new governor of the Central Bank, two further developments followed, each with its own significance. The first is the comeback of two of Egypt’s foremost veteran bankers - Hisham Ezz Al-Arab and Mohamed Naguib - as advisers to the new governor, indicating that the Central Bank is opening its doors to cooperation and consultation with the entire banking sector and welcomes national expertise and competency. The second development is the easing of previous restrictions on cash deposits and importation, in another indication that the general trend will be towards easing, not restricting. Both signals were welcomed by local and international markets.

With the media focus on the government and Central Bank changes, other crucial appointments took place but did not receive their fair share of attention and analysis. I refer to the appointments of several new heads of important economic and regulatory institutions, primarily Mohamed Farid as head of the Financial Supervisory Authority, and Islam Azzam and Ahmed Abdel-Rahman as his two deputies, then Rami Al-Dukani as chairman of the Egyptian Stock Exchange, along with Heba Al-Serafi as his deputy, as well as Walid Gamal El-Din as head of the Suez Canal Economic Zone, and last but not least Khaled Abbas as head of the Administrative Capital Company. These changes are significant not only in light of the importance of the positions they occupy, but also because they reflect the rise of a new generation of economic leaders and regulators distinguished by modern education, private sector experience, and valuable track records in public office.

As for Egypt’s negotiations with the International Monetary Fund, the information available here is quite limited as the final agreement has not yet been reached. But it is clear that it is drawing to a conclusion, since the prime minister commented last week that “the government is in the final stage of agreements on new financing from the International Monetary Fund”. In terms of its content, experts point out that it most likely revolves around exchange rate management, bank lending, the state’s role in economic activity, and encouraging private investment. The preceding is not information, but rather my understanding of what scattered news is available. But, whatever the case, it is certain that the funding Egypt hopes to obtain from as well as support for the government’s economic policies have become two cornerstones of the state’s plan to bring us out of the current crisis.

In addition to previous elements that make up our economic landscape, one should also point to the recent visits by Arab presidents and kings during the summer, as well as the Arab investment in the acquisition of shares of Egyptian companies and assets. The latter, however, although it brought in urgently needed foreign currency, has become a source of mounting concern in public opinion, not out of a rejection of Arab investment, but rather for fear of continuing to sell valuable assets at low prices due to bad economic conditions.

Finally, the government had announced in mid-June that it would start a national dialogue on the State Ownership Document for a period of three months, ending next week. Observers and commentators on economic affairs are eagerly waiting to see whether the document will be amended in the light of that dialogue, whether it will remain unchanged, but most importantly whether it will be actually implemented.

These are the various intertwined factors contributing to our economic landscape, and in the next few weeks, they will have a significant impact on our economic path, especially with the continuation of disruption in global markets. In summary, an agreement appears imminent with the International Monetary Fund, a relative détente in import and banking transactions is forthcoming, and new blood has been injected in the leadership of many important economic and regulatory bodies. But all this effort will not bring real, long-lasting solutions to our economic problems unless it is accompanied by an ambitious programme to advance production, investment, manufacturing and employment, to re-prioritise public spending, and to protect those with limited and medium incomes. 

Otherwise, we may succeed in overcoming the symptoms of the current crisis - and I sincerely hope we do - but without overcoming its original causes and roots.

* This article also appears in today’s edition of the daily Al-Masry Al-Youm.

*A version of this article appears in print in the 8 September, 2022 edition of Al-Ahram Weekly.

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