Egypt minister defends borrowing strategy
Cairo - The overriding goal for Sahar Nasr, Egypt’s International Cooperation minister, is to convince international donors, development partners and institutions to lend Egypt billions of dollars.
Such an amount of money, Nasr said, is vital if Egypt is to implement its economic development plan for this fiscal year.
“We will use the money in initiating indispensable health, education and sewage projects in different parts of Egypt,” Nasr said. “True, some of these projects will not have financial returns but investing in humans is what will help our country make progress in the future.”
Nasr said she was stunned when villagers in southern Egypt, whom she visited a few months ago, told her that their utmost dream was to have drinking water delivered to their homes. At another village, locals told Nasr that they needed small projects to help them earn a living.
She said she has these aspirations in mind when she works to make Egypt’s development plans a reality. Since taking over in September 2015, Nasr, an economics professor at the American University in Cairo, has brought in billions of dollars in grants and easy-term loans to Egypt at a time the country badly needed the funding.
Nasr’s success is guaranteed by growing international confidence in the Egyptian economy and the Egyptian leadership, observers said. They add that international donors would not risk their money in a country where the economic future was not certain.
“Donors make very thorough studies about the economic prospects of countries before lending them,” economist Abdel Raouf al- Idrisi said. “Donors will never lend a country like Egypt if they are not certain that this country can repay the loans.”
From 2011-16, Egypt received $31 billion in loans from other countries and international institutions, the Central Bank of Egypt data indicate. Nasr has secured $10 billion in grants and easy-term loans since taking office.
She said the grants and loans were used in implementing social protection projects, including the Solidarity and Dignity programme, which gives monthly financial support to 1.2 million families. The annual budget of the programme is $400 million and the government tries to enlist more beneficiaries to cushion the effects of economic reforms on the poor.
“Such a programme and others offer the necessary social protection to millions of people in our country,” Nasr said. “We are badly in need for such programmes, especially in the light of the ongoing economic reforms.”
The reforms have included the flotation of the national currency against foreign currencies and a slashing of fuel, electricity and water subsidies. The reforms have been devastating to poor and middle-class Egyptians, where 27.8% of the population is considered under the poverty line
Samir Ghattas, a lawmaker and a political commentator, said Nasr’s policies and the government’s overdependence on borrowing paralyse Egypt’s economy and destroy its future prospects.
“The minister follows a misguided policy because she soaks the country in endless debts,” Ghattas said. “Instead of borrowing, the government should think of attracting investments, increasing exports and generating revenues from production.”
By the end of October 2016, Egypt’s foreign debts totalled $55.8 billion, up from $48.1 billion in 2015. The obligations amount to 98% of Egypt’s gross domestic product, a situation that could be an economic catastrophe, economists said.
This was probably why Egyptian President Abdel Fattah al-Sisi asked government ministers not to accept loans before ensuring that the national budget had enough funds for repayment.
However, Nasr’s efforts to fuel the implementation of Egypt’s economic and social development plans should not be underestimated.
Among the youngest of the cabinet members, Nasr, 47, has introduced tremendous change to the way the International Cooperation Ministry works. She also revolutionised Egypt’s cooperation with international development partners.
Nasr emphasised that the money she delivers to the national treasury improves living conditions for the Egyptian people and helps the government introduce basic services to the public.
“When we bring clean drinking water to people in the countryside, for example, we contribute to improving public health,” she said. “This saves millions of pounds that can be spent on the treatment of the public in case contaminated water causes them health problems.”