10 FRIDAY 13 MARCH 2015 AL - AKHBAR EGYPT THE FUTURE The world economist Mohamed El-Erian : Egypt is to overcome decades of chronic economic underperformance With bad news generating many of the headlines from the Middle East, the Egyptian government is trying to correct this perception by inviting a range of high-level officials from both the public and private sectors to Sharm el-Shiekh for the Egypt Economic Development Conference, to shed light on the ongoing revival of one of the largest economies in the region. After another rough patch, the Egyptian economy is picking up. Growth accelerated to more than 5 percent in this fiscal year›s first half, which ended in December 2014. Investment, both domestic and foreign, is gradually recovering. Tourism is slowly coming back. The budget deficit is targeted to fall to 10.5 percent of gross domestic product. The aim isn›t just to stabilize the economy. It is also to unlock the country›s significant untapped potentials. To this end, immediate measures to stabilize the economy are being accompanied by three, mutually reinforcing pillars of durable economic reform: Enhancing actual and potential growth and job creation, including a new investment law to reduce inefficiencies, increase investor protection and provide targeted incentives; and a subsidy reform to better target support for the more vulnerable segments of society. The measures implemented so far by the government aim to create a macroeconomic framework that credibly targets sustained high inclusive growth, whose benefits are shared widely by the population, with particular emphasis on protecting the most vulnerable. This time, Egypt is also benefiting from the substantial support of its partners, notably Saudi Arabia, the United Arab Emirates and Kuwait. Egyptian economic transformation has spillover effects beyond the country›s borders. The Egyptian authorities aren›t alone in their efforts to reform economic policy to ensure superior outcomes. They aren›t the only ones to have recognized that success means doing things both better and differently. And they aren›t the only ones seeking to place greater emphasis on engaging youth, an absolutely critical element of any inclusive approach to reform, and a paramount necessity. Given these promising developments, at least four transitions will be critical to Egypt›s success in building a more prosperous economy: Improving policy implementation to ensure that the design of programs includes responsive execution that adjusts in a timely fashion to developments in an increasingly volatile global economy. Moving economic development away from relying just on state-led growth to a more inclusive model that supplements important national projects with public-private partnerships and private sector activities (particularly small and medium-sized businesses and start-ups).) Restructuring domestic institutions to ensure they are more transparent, efficient, accountable and inclusive, and that they meet the needs of all Egypt’s people, not a privileged few. Broadening external support for Egypt’s domestic reforms from a few partners to a wider range of donors (including regional and multilateral institutions).) These transitions are critical if Egypt is to overcome decades of chronic economic underperformance, reduce its excessive vulnerability to the vagaries of an increasingly volatile global economy, and meet the legitimate aspirations of the January 2011 revolution. Ensuring that they occur successfully, and simultaneously, will require a combination of careful domestic implementation and timely external support. They also need to sustain broad social and political buy-in. The benefits of a successful Egyptian economic transformation would have notable spillover effects that extend well beyond the country›s borders. A dynamic and growing Egypt constitutes an integral part of a more secure and stable Middle East. FRIDAY 13 MARCH 2015 AL - AKHBAR EGYPT THE FUTURE 11 Al-Ahawany, Minister of International Cooperation: 3 strong indications for Success Great efforts made by the Ministry of International Cooperation headed by Minister, Dr. Naglaa Al-Ahwany during the preparation of economic conference to be the link between Egypt and the world through coordination with the Ministry of Foreign Affairs. It succeeded through coordination with all countries at the official level of governments and regimes, to confirm the participation of 60 countries high-level delegations, as well as major investors and international companies. Al-Ahwany made many promotional meetings organized by the ministry inside and outside Egypt, in order to achieve the dream of the “Economic Conference”. The following lines reveal Al-Ahwany’svision for the conference and opportunities for Egypt to benefit from it, and the investors opportunities to achieve further gains through Investment in Egypt. How was the beginning of the idea of the Economic Conference? The “Conference” at first was just an idea and an appeal made by the late King Abdullah of Saudi Arabia, for providing aid to Egypt after the “June 30”Revolution, and the losses incurred by the Egyptian economy during the two years of revolutions which has been very well received by the Eg y ptian government and “Strong participation of world-class economists with national and foreign investors” Arab allies. The government is well aware of the importance of grants in ce rtain t iming, and we must thank all those who supported Egypt, led by the Gulf countries which helped the Egyptian Economy to overcome the crisis. Egyptian state enhanced King Abdullah’s initiative in order that the “Conference” will be an opportunity to attract real investment, and then, put Egypt on the map of international investment to achieve high growth rates accompanied by a fair distribution of the returns of this growth to the society at all levels. Al Ahwany added that there are three indicators which point to the success of the conference, the first will be shown in the success of the go vernment in the delivery of its ec onomic vision to the world the best proof of twhich is the number of conference participants, despite all the plots against Egypt whrther to thwart the government’s efforts to achieve economic recovery felt by the the poor and the rich. Nowadays, hundreds of investors: Egypti ans, Arabs and foreigners and do zens of official delegations and re presentatives of international fina nce institutions, will participate in the conference. The second indicator is the government’s success in offering investment opportunities and projects to the participants. There are some projects which will be completed and marketed after the conference, along with a numbe r of companies that provided material and moral support for the Economic Conference, the number of which reached 25 local and interna tional companies. This was the third indicator of the success of the conference as shown in the success of the government in establishing a free economy that supports the management of the private sector. Ahead of Egypt Investment Conference, world testimonials for Economic Reforms According to an article written by… published on Forbes on Wednesday. Ahead of the approaching economic summit, many world organizations expressed their encomium of the measures implemented by the Egyptian government in order to make the investment climate more attractive and remove all obstacles encountered by investors, to revive the national economy. Egypt’s President Abdel Fattah al-Sisi’s government sees the conference as an important component of a strategy to improve the economy through attracting private investment. Sisi has gone after corruption and put in place reforms to gradually ease out subsidies on food and energy. One successful example of this is a new smart card system which reduced corruption, encouraged accountability and efficiency. “Under the new system, families are issued plastic cards allowing them to buy five loaves per family member per day,” wr ites Reuters, “Buyers no longer have to qu eue. Bakeries are paid for the subsidized lo aves they sell, rather than being given a fixed allotment of cheap flour, making it harder to siphon off subsidies.” The IMF is positive about the Egyptian government’s economic reforms. “The authorities’ policies to achieve inclusive growth and job creation focus on pursuing structural reforms, promoting investment, and protecting the poor… Measures implemented so far, along with some recovery in confidence, are starting to produce a turnaround,” according to a recent report. Nonetheless, the IMF adds, “But the authorities’ success in meeting their goals will depend on their steady efforts, willingness to take additional actions as needed, and continued external support”. In 2014, Transparency International ranked Egypt 94th out of 175 countries. This is an improvement from the previous year, when E gypt ranked 114th out of 175 countries, e ven though the latest score still shows that Egypt has a long way to go. Similarly, in 2015, t he World Bank 2015 Doing Business report r anked Egypt 112th out of 189 countries—a one point improvement from 2014, yet still a score that reflects considerable challenges. By many accounts, Egyptians are currently optimistic about Sisi. Their priorities right now are economic improvements over anything else. They see Sisi working towards genuine economic reform, and are even willing to put up with short-term hardships such as temporary energy shortages, if this means gaining long-term improvements Egypt’s regional influence is too important when it comes to stability the Middle East. The withdrawal of U.S. support for Egypt does nothing to advance a human rights agenda and hurts U.S. security interests by pushing Egypt further towards anti-Western players.
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