By Una Galani / Reuters Breakingviews
The Muslim Brotherhood’s economic platform isn’t likely to be fully implemented, but it offers a good glimpse of the type of policies they will push for in the months to come. Few of the ideas of the movement’s Freedom and Justice Party are new or radical. Furthermore the long-repressed faction may still have to wait to get control of government positions. Still, some of its proposals could take Egypt in the right direction.
The Brotherhood wants a gradual replacement of interest-paying institutions with Islamic ones stifled under the previous regime. Issuing Islamic bonds could ease the government’s financing woes by providing access to a larger pool of capital than currently available to Egypt. In any case banks expect that their traditional activities will still account for a decent market share.
Success for the Brotherhood’s big money-saving ideas is also likely to be measured. Reviewing the value of contracts that granted land to businessmen might not bring the over-optimistic $800 billion the movement says it is worth over time. And collecting unpaid taxes ? for up to $6 billion, according to the movement’s estimates ? could chase away investors if done too aggressively. The military-appointed interim government has also already begun renegotiating gas export deal, which could bring some extra billions. But the government will have to tread carefully ? for example, this could have implications for the peace accord with Israel.
There are some easier wins. The Brotherhood wants to end the practice of “special funds,” widely-regarded as slush funds spread around some ministries, and make them part of the official government budget.
The Brotherhood proposes new taxes on stock market profits, land, the communications sector. It wants to cut subsidies for the rich while hoping to extend the safety net for the poor with higher wages and pensions and better healthcare.
If all goes according to the rosy plan, there would be enough resources to plug the budget deficit, which official estimates put as some $22 billion for the year ending June 2012. But the Brotherhood must proceed with caution. It can hardly introduce new taxes until it agrees on external aid. And the renegotiation of land deals could take years. Still, an eventual government led by the Brotherhood, keen to stamp out corruption and enjoying popular support, has a better chance than the last regime of fixing Egypt’s many problems.
Una Galan is a Reuters Breakingviews columnist.