News / Economy

High-powered Egypt Economic Team Heartens Investors

FILE - Traders work near the exchange bell at Egypt's Stock Exchange in Cairo, July 3, 2013.
FILE - Traders work near the exchange bell at Egypt's Stock Exchange in Cairo, July 3, 2013.
Reuters
Egypt's new military-backed administration has pleased investors by appointing experienced economic policy makers to a cabinet whose cohesion will be sorely tested in the coming months.
 
Over the past few days, trained economists and technocrats have been given key ministerial posts in the government that is replacing the administration of president Mohamed Morsi, deposed nearly two weeks ago in a move that polarized Egyptian society.
 
Taken together, they appear to form the country's most high-powered economic team since its February 2011 revolution ushered in a series of unstable cabinets which were chosen as much for ideology and political expediency as for expertise.
 
The new cabinet's credentials will not alone ensure that Egypt can overcome problems such as crumbling state finances, a big trade deficit and rising inflation - but the team's very existence may go some way to restoring business confidence.
 
“I think they are smart enough to deal with the new outcomes on the ground,” Mohamed Kotub, director of asset management at Naeem Financial Investments in Cairo, said of the new ministers.
 
He predicted the cabinet would focus on restoring public security, boosting tourism and luring foreign investment back to Egypt - key demands of the business community which many felt were ignored by Morsi's government.
 
The range of views it contains is aimed at allaying anger over the overthrow of the democratically elected Morsi, but could store up trouble as it considers how to tackle crippling subsidies and currency woes.
 
Technocrats
 
Morsi's cabinet was short of relevant experience. Two of his finance ministers, for example, had academic backgrounds studying Islamic economics - of limited immediate use in an economy where Islamic banking plays only a tiny role, and which is facing a balance of payments crisis.
 
Morsi's last finance minister, Fayyad Abdel Moneim, made his academic name researching subjects including “economic functionaries in the Islamic state at the time of the Prophet and the Righteous Caliphs”.
 
Also, post-revolution governments in Egypt had trouble attracting experienced technocrats because they feared being tainted by an unpopular ruling military council or by the Islamist ideology of the Muslim Brotherhood.
 
The new cabinet appears to have overcome this, including ministers who can speak the language of investors, foreign and local. Some also have administrative experience needed to push economic policies through a sluggish state bureaucracy.
 
New Prime Minister Hazem el-Beblawi, who is to steer Egypt until parliamentary elections planned in about six months, ran Egypt's Export Development Bank for 12 years and went on to work at regional economic agencies in the Middle East.
 
Ahmed Galal, managing director of the Cairo-based Economic Research Forum since 2007 and for 18 years a researcher at the World Bank, was appointed finance minister on Sunday.
 
Ziad Bahaa El-Din, who is a member of the leftist Egyptian Social Democratic Party, will be deputy prime minister; he has a doctorate in banking law from the London School of Economics and ran Egypt's investment authority between 2004 and 2007.
 
Egypt's interim authorities have not been able to ignore ideology and horse-trading in choosing their economic team. In an effort to reduce political tensions, they have had to take care to appear inclusive of a range of opinion.

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