Planning minister says Egypt is ‘on the right track’
CAIRO - Egypt’s minister of planning and administrative reform said that, while economic reforms have been painful to millions of Egyptians, there is light at the end of the tunnel.
“It is important for people to know that the current administration could have easily avoided getting the criticism it is getting by neglecting the reforms and applying quick fixes to economic problems,” Planning Minister Hala al-Saeed told The Arab Weekly. “It, however, opted for painful reforms but the same reforms will save the economy for many years to come.”
Saeed is at the heart of Egypt’s development plans and some people attribute her having survived a cabinet shuffle in June to the efforts she made since taking over the ministry in February 2017 in reforming Egypt’s administration and the development of the economy.
An economist, Saeed is the daughter of former Electricity and High Dam Minister Helmy al-Saeed and Egypt’s second female planning minister.
“The unemployment rate is falling. The economic growth rate is growing and the inflation rate is dropping,” Saeed said. “All of these indicators show that we are moving on the right track and the future holds many good things for the people.”
Egypt’s unemployment rate fell to 10.5% in the third quarter of the fiscal year 2017-18, which ended June 30. The unemployment rate in the corresponding quarter of the previous fiscal year was 12.6%.
The economic growth rate rose to 5.4% in the same quarter, the highest in seven years, up from 4% in the same quarter a year earlier. Foreign currency reserves have risen to $44.3 billion, the highest in Egypt’s history. The inflation rate was down to 12.9%, from more than 16%.
These developments are helping the central bank reduce the basic interest rate, which is expected to encourage investments and propel market activities.
Egypt, Saeed said, would work to raise the economic growth rate to more than 7% in the coming years. She said economic development goals could not be achieved without first securing a high growth rate over a long period.
“We are talking about sustainable growth here,” Saeed said. “To be able to solve our country’s economic problems and for the people to feel the effect of the reforms, this growth rate must persist for several years.”
Egypt needs solid economic growth to meet the needs of its population, which is growing at 2.5% annually, and create enough jobs for the approximately 600,000 graduates joining the labour market every year.
The government depends on specific sectors, including energy, to hit economic growth targets, Saeed said. It has been growing rapidly thanks to major oil and gas finds.
The discoveries include the huge Zohr gas field off Egypt’s Mediterranean coast, which is expected to turn Egypt into a natural gas exporter in a year. Another major discovery off the coast of North Sinai is to see drilling operation begin within weeks.
Saeed said economic growth would also be fuelled by the industrial sector, which Egypt is trying to revive to reduce imports and increase exports. She also pointed to the construction sector.
“These are sectors that have huge potentials, are ready for investments and have the ability to transform the economy,” she said.
Even with statistical evidence of economic improvement, the government is finding it increasingly difficult to convince Egyptians with optimistic talk. The poverty rate has risen dramatically to 28.7% because reforms caused a sharp rise in commodity prices.
The flotation of the Egyptian pound, a November 2016 decision to eradicate a parallel foreign currency market and boost foreign currency reserves, caused the national currency to quickly lose almost 50% of its value.
For an import-dependent country, this has proven to be a major challenge, with ordinary Egyptians suffering the most.
Egyptian President Abdel Fattah al-Sisi has expressed concern that some people did not want his administration to maintain the reform drive.
“We must walk the road to the end like we promised each other,” Sisi said in late July in a National Youth Conference speech.
Saeed said the government was confident that the coming months would bring good economic news for Egyptians.
“We are talking about things that can be measured here,” Saeed said. “When more people find jobs, this shows that the reforms are paying off.”