CAIRO: “We need to concentrate on two things: poverty alleviation and addressing education,” Minister of Finance Youssef Boutros-Ghali told a conference Tuesday.
The minister outlined an ambitious plan to decrease the poverty ratio by 50 percent in the next few years, speaking at the two-day Euromoney Egypt Conference titled “Competing for Investment, Investing in Competitiveness,” focusing on infrastructure, renewable energy, small and medium enterprises, and institutional investments in both capital markets and securities.
“We have an economy that will grow at 7 percent or 8 percent hopefully and we need to make sure that we have the tools to redistribute income to the poverty stricken,” he added.
Ghali told reporters after his speech that Egypt’s economy may grow 6 percent in the financial year ending in June 2011, Reuters reported. The economy grew by 5.2 percent in 2009/10 and 4.7 percent in 2008/09.
Egypt needs to be more efficient in the use of resources and focus on domestic demand, which according to Ghali, fueled 4.7 percent of the growth during the crisis. He also lauded the government’s handling of the crisis and the creation of a growing middle class.
“Our plans for the future are to get this middle class to grow faster in a more integrated and organized way. We can rely on their spending to generate jobs, skilled workers and welfare and we hope to have a local investment community that is lively,” Ghali added.
This year’s target deficit was 7.9 percent of GDP, but it is expected to come in even lower at 7.5 percent. That compares to 8.3 percent in the previous 12 months.
Egypt’s various balances are under control, he said: “This year we are anticipating a surplus.”
To maintain the momentum, Egypt must foster a strong investment climate, Ghali said, adding that he hoped Egypt would attract $9 billion of foreign direct investment this year.
On the other hand, remarks from Investment Minister Mahmoud Mohieldin — who will leave his post soon to join the World Bank as managing director, and joked that he was “in between jobs” — were somewhat contradictory to Ghali’s, particularly regarding the creation of a middle class.
“The culture of supporting businesses is not present in this country,” said Mohieldin.
Comparing Egypt’s current government with that of the 60s, Mohieldin said that the latter were pragmatic and would have supported the young, bourgeoning private sector and those who wanted a better standard of living.
“They would not have put obstacles [to] growth and investment,” he said, adding however that the current government had managed over the years to eliminate much of the bureaucracy in institutions, specifically the Ministry of Investment.
“We managed to take the competitiveness ranking for investment to 24th place up from 125th place when we first started our reforms,” said Mohieldin.
“Problems remain with permits and investment procedures, but they will be solved by one-stop shops which will be set up around the country,” he added.
Daily News Egypt asked Mohieldin how the recent Madinaty case will affect the investment climate, to which he responded by saying it should be viewed from a market perspective.
Egypt’s cabinet said on Sunday it would scrap the original contract for TMG’s estimated $3 billion Madinaty project after a court ruled the deal was illegal, but would reallocate the same land to the firm in a new contract.
The Madinaty issue is one of confusion rather than a structural problem, and was solved by a decisive — though short-term — reaction from the government. “When the verdict came out, the market dropped; but when government reacted quickly, the market reacted as well and bounced back up. If problems like this persist, I am sure the government will be capable of coming up with long-term solutions,” Mohieldin said.
Commenting on the upcoming elections, and fears of a political succession of power by the president’s son, Mohieldin said the uncertainty “has not and will not affect investors.”
“I have been talking recently to a significant number of very large investors and they all see that there is no cause for concern. In the 2005 and 2006 election years, some people expected it to be a problem but those were the years with the highest investment figures in recent years.”