News / Middle East

Egypt Economy Chiefs Vow to Ease Shortages

Mohamed Abu Shadi, Egypt's new supply minister, speaks to the media at his office in Cairo, July 17, 2013.
Mohamed Abu Shadi, Egypt's new supply minister, speaks to the media at his office in Cairo, July 17, 2013.
Reuters
Economic ministers in Egypt's new military-backed government are pledging to ease shortages and make it easier for factories to operate, while signaling that any major reforms to repair the state's crumbling finances will be undertaken cautiously.
 
The cabinet, formed this week, has not yet issued a detailed statement on its plans for the economy, but public comments by ministers suggest they will focus first on reducing public discontent and removing barriers to industrial production.
 
Major structural reforms of economic policy, such as changes to Egypt's wasteful and expensive system of fuel and food subsidies, will be discussed, but early action is unlikely.
 
“My first priority is to make sure that supplies of basic commodities like wheat are within the safe limits,” Thursday's state-owned Al-Ahram newspaper quoted Mohamed Abu Shadi, a police general who was appointed supply minister, as saying.
 
Foreign exchange shortages under the government of president Mohamed Morsi, ousted this month by the army, reduced Egypt's wheat imports and its stocks of the grain have fallen.
 
Shadi said he aimed for a public discussion about Egypt's bread subsidies, a debate that would include producers, distributors and consumers. But he did not specify when the talks would end and when decisions on any reforms might be made.
 
State news agency MENA quoted him as saying no action affecting citizens would be taken before a public opinion poll had been conducted to find out their needs and demands.
 
Interim
 
The caution with which Egypt's interim cabinet is approaching economic policy stems from the political pressures it will face in a tense transition back to civilian rule.
 
After a year of Morsi's administration, Egypt's fiscal position is desperate; in recent months government revenue has covered barely half of all expenditure, leaving borrowing and aid to make up the rest.
 
But a major task of the interim government is to steer Egypt to parliamentary elections expected in about six months. The transition could be delayed by any radical reforms of the budget system that hurt living standards and brought protesters back onto the streets.
 
Also, this month's pledges of $12 billion of economic aid from Saudi Arabia, the United Arab Emirates and Kuwait are likely to ease immediate pressure on the budget, allowing the government to continue spending in coming months.
 
People argue at a petrol station during a fuel shortage in Cairo, June 26, 2013.People argue at a petrol station during a fuel shortage in Cairo, June 26, 2013.
x
People argue at a petrol station during a fuel shortage in Cairo, June 26, 2013.
People argue at a petrol station during a fuel shortage in Cairo, June 26, 2013.
So rather than pushing bold policy changes in the near term, the new cabinet looks likely to focus on trying to resolve some of the logjams, logistical breakdowns and inefficiencies that damaged the economy under Morsi, such as the fuel shortages that caused public outrage.
 
Sherif Ismail, the new oil minister, told Al-Ahram this week that he would focus on meeting domestic demand for petroleum products by increasing natural gas production and resuming imports of diesel and low-quality mazut fuel.
 
Interim trade and industry minister Mounir Fakhry Abdel Nour said his priority would be resuming halted industrial projects, providing power to industry, and bolstering security in industrial areas.
 
In an apparent effort to secure working class support for the government, manpower minister Kamal Abu-Eita, a former union leader, has said he plans to strengthen legal protection for unions and improve minimum wage policy. He did not give details.
 
Stalled IMF talks
 
The cabinet as a whole has not yet said clearly whether it will resume talks with the International Monetary Fund on a $4.8 billion loan, which would come attached to economic reform commitments that the government might find politically risky.
 
Planning minister Ashraf al-Arabi said this week that now was not the right time to restart negotiations with the IMF because the aid from the Gulf would carry Egypt through the transitional period.
 
The new finance minister, Ahmed Galal, said in a statement late on Wednesday that an IMF loan was “part of the solution”, but he did not specify whether the interim government would aim to sign an IMF deal during its tenure, or leave that to a post-election administration.
 
It is possible that the interim government, which is packed with economic technocrats, will hold talks with the IMF and make minor reforms, laying the groundwork for bigger changes.
 
Final decisions and implementation of them, as well as the signing of any IMF deal, could be left to the next government, which will be able to claim a democratic mandate.
 
“We need time to read and study the issues and files on the ground, to come up with sound and well thought-out decisions that will pave the way and build the future for governments to come,” Galal said in his statement.
 
He said it was important to manage public spending and bring the budget deficit under control. But he also said Egypt needed to avoid deflationary policies as they could hurt the labor market - a hint that quick, sharp public spending cuts would not be made.
 
An army official, speaking on condition of anonymity as he was not authorized to talk publicly about economic issues, said the army understood the importance of fixing the economy and would give the cabinet a lot of leeway to do so.
 
“We are leaving it to the interim government to decide on polices, and they will get our backing on whatever they agree to do, including if they want to move forward with the IMF deal.”

You May Like

Photogallery Oxfam: Ebola Could Be 'Disaster of Our Generation'

Meanwhile, Fidel Castro, the former leader of Cuba, says the Caribbean island nation will 'gladly cooperate' with the US in the fight against Ebola in West Africa More

Multimedia Kobani Fighting Sends 400,000 Refugees to Turkey

Refugees receive help from Turkish authorities and individuals, but say much more is needed More

India’s Ruling Nationalist Party Makes Gains in Regional Elections

Bharatiya Janata Party’s huge margin over its rivals puts it on course to form governments in the northern Haryana and western Maharashtra states More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Exclusive: American Joins Kurds' Anti-IS Fighti
X
Zana Omer
October 18, 2014 6:37 PM
The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.
Video

Video Syrian Defector Leaks Shocking Photos of Torture Victims

Shocking photographs purporting to show Syrian torture victims are on display at the U.S. Holocaust Memorial Museum in Washington. The museum says the graphic images are among thousands of photographs recently smuggled out of Syria by a military policeman-turned-defector. As VOA reporter Julie Taboh reports, the museum says the photos provide further evidence of atrocities committed by the government of Syrian President Bashar al-Assad against its own people.
Video

Video Drought-Stricken California Considers Upgrading Water System

A three-year drought in California is causing a water shortage that is being felt on farms and cities throughout the state. As VOA's Mike O’Sullivan reports, water experts, consumers and farmers say California needs to make changes to cope with an uncertain future.
Video

Video TechShop Puts High-tech Dreams Within Reach

Square, a business app and card reader, makes it possible to do credit card transactions through cell phones. But what made Square possible? VOA’s Adrianna Zhang and Enming Liu have the answer.
Video

Video Church for Atheists Goes Global

Atheists, by definition, do not believe in God. So they should have no need of a church. But two years ago, a pair of British stand-up comedians decided to create one. Sanderson Jones and Pippa Evans told the BBC they envisioned “something like church but without God". Their “Sunday Assembly” movement has grown from a single congregation in London to dozens of churches around the world. Reporter Mike Osborne visited with the members of a Sunday Assembly that now meets regularly in Nashville.
Video

Video Robot Locates Unexploded Underwater Mines

Many educators believe that hands-on experience is the best way to learn. Proving that the method works is a project developed by a group of students at the Stevens Institute of Technology, in Hoboken, New Jersey. They rose up to a challenge posted by the U.S. Department of Defense and successfully designed and built an underwater robot for locating submerged unexploded ordnance. VOA’s George Putic reports.
Video

Video Liberia's JFK Hospital Reopens After Temporary Ebola Exposure

JFK Hospital is Liberia’s largest and one of its oldest medical facilities. The hospital had to close temporarily following the deaths of two leading doctors from Ebola. It is now getting back on its feet, with the maternity ward being the first section to reopen. Benno Muchler has more for VOA News from Monrovia.
Video

Video Hong Kong Protests Expose Generation Gap

Most of the tens of thousands of protesters in Hong Kong are students seeking democracy. Idealistic youths say while the older generation worries about the present, they are fighting for the territory's future. VOA's Daniel Schearf reports from Hong Kong.
Video

Video Liberians Living in US Struggle From Afar as Ebola Ravages Homeland

More than 8,000 Liberians live in New York City, more than in any other city outside of Liberia itself. As VOA’s Bernard Shusman reports, with the Ebola virus ravaging their homeland, there is no peace of mind for these New Yorkers.
Video

Video Kurds See War-Ravaged Kobani As Political, Emotional Heartland

Intense fighting is continuing between Islamic State militants -- also known as ISIS or ISIL -- and Kurdish forces around the Syrian town of Kobani, on the Turkish border. The U.S. said it carried out at least nine airstrikes against Islamic State positions Friday. Meanwhile the U.N. has warned that hundreds of civilians would be massacred if the town falls to the militants. Henry Ridgwell looks at the strategic significance of the city.

All About America

AppleAndroid