Prior to his election, President Abdel Fattah Al-Sisi released his electoral platform on 20 May, following wide criticism for withholding it. The platform did not specify the number of projects that will be launched, but rather focused on the general sectors.
A year after his election, Daily News Egypt evaluates Al-Sisi’s economic performance in comparison to the promises set in his economic platform, and the goals set by his government earlier this fiscal year.
GDP Growth and budget deficit
Al-Sisi promised gross domestic product (GDP) growth will be around 7% by fiscal year (FY) 2017/2018. During the first half of FY 2014/2015, GDP growth recorded 5.6%, up from 1.2 percent growth during the same period the previous year. On Tuesday, Minister of Investment Ashraf Salman predicted that growth will reach 4.5% by the end of the fiscal year.
Salman also stated that the budget deficit to reach about 10.5% during the current fiscal year. The public debt recorded EGP 2.1tn in March 2015, representing 93.8% of the GDP.
This falls short of the expectations set by Al-Sisi’s government in the state budget at the beginning of the fiscal year. The government was hoping to decrease the budget deficit to 10% of GDP, pushing debt down to 90% of GDP in the fiscal year.
In his economic platform, Al-Sisi said the budget deficit would plummet to 8.5% by FY 2017/2018. He added that during the same period, public debt shall be reduced to 74.5% of GDP.
Economy expert and Professor Karima Korayem said the government is still dealing with Egypt’s economic issues in an improvisational way. She added that Al-Sisi’s main success is in the political field, as he helped Egypt “recover its international status”.
“A set of criteria should be set to take a specified direction to deal with the economic issues that exist,” she said.
Cairo University’s Professor of Economics Alia El-Mahdy said the growth in GDP has not reached the expected level. She added, however, that it has notably improved in comparison with previous years, where it stood at 2.5%.
Head of Economic Research at the Egyptian Social and Economic Centre, Heba Khalil, said the major issue facing the budget deficit is the lack of a sustainable source of revenue. This sustainable source is taxes, Khalil said, adding that it has become clear the government does not collect enough taxes, and must find other sources.
“The government takes one step forwards then takes ten backwards,” Khalil said, discussing the halting of the capital gains tax, wealth tax and the unification of the income tax at 22.5%.
Khalil emphasised that loans provided from other counties are not a sustainable source, but rather “a very political source”.
She explained that these loans place pressure on the budget over the year due to the repayment of interest.
Al-Sisi’s platform aimed to decrease unemployment to 8% by FY 2017/2018. Egypt’s unemployment rate has slightly decreased in the first quarter (Q1) of 2015 to register 12.8%, down from 12.9% in Q4 of 2014, and 13.4% in the corresponding quarter last year.
Prime Minister Ibrahim Mehleb said that “optimistic expectations” for unemployment suggest it will be reduced to below 12% by the end of the current fiscal year.
El-Mahdy mentioned the improvement in unemployment as “minimal”. Khalil added that in order to reach the government’s expectations by the end of the fiscal year, it has to focus on labour intensive projects.
“The projects the government is focusing on are heading in the direction of mechanisation and technology,” Khalil said. “Projects such as the fuel cards and the new mechanised bread system will result in layoffs.”
Khalil added that it is important to hire youth, whilst not making older workers exit the labour market.
Progress in tourism
The platform promised unprecedented development in the tourism sector, targeting 30 million tourists annually through the development of 26 cities and integrated tourist centres across 21 governorates.
Head of the Tourism Development Authority (TDA) Serag El-Din Saad said the authority will offer lands as soon as the executive rule of the unified investment law is issued. The law will work on avoiding obstacles which stand in the way of investments of any kind.
Five tourism projects were offered at the March Economic Summit worth EGP 5.3bn in investments. One of the offered projects was a tourism resort in Hurghada worth EGP 1.076bn. The second was a resort on the North Coast worth EGP 318m.Two further resorts in Marsa Allam were offered worth of EGP 1.215bn and EGP 663m respectively; and a sports resort in south Safaga worth EGP 1.989bn.
Four major companies showed interest in two of the projects: SODIC, Travco, a company owned by businessman Samir Abdel Fattah, and a company owned by Islam Mahdy.
Tourist numbers arriving to Egypt increased to 10 million in 2014, compared to 9.5 million tourists in 2013. The first quarter of 2015 saw a 6.9%increase globally over the same period last year, the presidency said.
Progress in land reclamation
Al-Sisi’s platform included the reclamation of 4m acres of lands, adding that the “availability of good soil and the access to water both allow this”.
Al-Sisi’s plan targets offering between 50,000 and 100,000 acres of lands to various Egyptian governorates to help with housing, agriculture and industrial projects, he said. The distribution of these lands would be overseen by the state, he added.Al-Sisi assigned the Ministry of Agriculture to start urgent operational plans to accelerate the implementation of field irrigation development in the old lands of Delta and the Nile Valley. In February, Minister of Agriculture Adel El-Beltagy said the implementation of a field irrigation project will provide a 7%-10% increase to Egypt’s cultivated land, according to Minister of Agriculture Adel El-Beltagy.
The project has been prepared by the Ministry of Agriculture to irrigate 5m acres and reclaim 1m acres as part of a national project for land reclamation.
The New Urban Communities Authority (NUCA) has also started reclaiming 10,000 acres in Farafra, located in the New Valley, according to the Affairs Sector Vice President Mazen Hassan.
According to the presidency, in the last year more than 500,000 acres of land have been reclaimed for agricultural use and community development.
Progress in Metallurgical industries
Discussing the developments in the metallurgical industries, Al-Sisi’s economic platform stated that 22 cities for comprehensive metallurgical industries will be introduced in various Egyptian governorates such as Beheira, Qena, Minya, Aswan, Luxor and North Sinai.
No announcements were made by the government on the progress of this plan.
Progress in other projects
The presidency stated that over the last 12 months 1600 kilometers of new roads have been built against a goal to add 3200 kilometers to Egypt’s transportation network. It also mentioned that it added that 3.6 GW of new power capacity were installed.