WATANI International
27 February 2011
Before Hosni Mubarak stepped down from his post as president of Egypt on 11 February, he had appointed Lieutenant General Ahmed Shafiq as Prime Minister. From then on, Shafiq headed the government which, following Mubarak’s departure was termed ‘caretaker government’. In the meantime, the Cabinet was reshuffled more than once and very recently a new government altogether was formed, still headed by Sahfiq.
Since the caretaker government took oath, a number of decisions were taken to meet people’s demands and alleviate the burden on the public. The question which begs an answer, however, is whether the decision makers took into account how Egypt’s economy would perform in view of these decisions—which were taken under critical circumstances—and how it would absorb them on the long term.
Raises
Since the first day of his appointment on 2 February, Egypt’s new Finance Minister, Samir Radwan, announced immediate measures to help get the country back on its feet. The Finance Ministry decreed a 15 per cent raise in wages and pensions effective as of end of March, compensation for individuals who lost their jobs, reduced custom duties on grain and foodstuffs, and increased State-financed medical treatment for the public. Owners of new taxis who had purchased them through a State-sponsored project to replace Cairo’s old cabs with modern new ones, and who owed the State money in the form of instalments due at the end of January, were exempted from payment.
Radwan also stressed that subsidies on basic supplies will not be affected. This was a thorny issue, since the previous regime had been trying to slowly phase out subsidies in return for an increase in salaries.
On 18 February, the Central Agency for Public Mobilisation and Statistics (CAPMAS) issued a report recording the losses incurred by the Egyptian economy between 28 January and 5 February and estimated them at EGP10 billion. According to CAPMAS, major losses were suffered by sectors of tourism; transitional industries; and building and construction. Cairo topped the list of towns suffering losses; followed by the Suez Canal towns including Suez and Port Said; and satellite towns among which were 10th Ramadan and 6th October.
Labour gains
Not to be outdone, the Ministry of the Labour Force announced it would be finding openings for jobs in the government and public sector for the unemployed. Predictably, thousands applied. Some tried to take advantage of the situation by printing copies of applications for jobs and selling a copy for EGP10, thereby making a small fortune.
Workers on temporary contracts were promised their contracts would be changed into long-term ones.
Obviously, the Finance Ministry is spending without limit in order to absorb the wrath of the masses as expressed in the main protests or in the minor demonstrations or walkouts conducted by specific sectors of the community. Financial reform implemented by the previous minister Youssef Boutros-Ghali, including his famed tax reform, has been waived aside. Boutros-Ghali had been, predictably, criticised for these measures but, adamant about reform, he had said that he did not wish to take the easy way out by making things unduly easy for Egyptians on the short term then paying hard for it on the long term. And yet, it must be admitted, even on the short term, his policy brought in substantial gains.
The several days during which the banks were closed led the Trade and Industry Minister Samiha Fawzy, who was later replaced by Samir Youssef al-Sayad, to allow the release, without payment of duties, of foodstuffs and industrial input goods held in customs. The measure, she said, was necessary to secure supplies on the market and production in factories.
A three-month grace period was granted for industrial projects under construction to honour their debts.
In cooperation with the labour and finance ministries, the trade and industry ministry is taking an action to sign long term contracts with thousands of workers in several sectors who used to work against temporary contracts.
Now’s the time
For his part, the Health Minister Ahmed Sameh Farid waived aside unpopular reforms decreed by his predecessor Hatem al-Gabali, which would have served to upgrade service in public hospitals by making specific sectors of patients pay a small fee for the service they received. Farid broadened the scope of the already highly subsidised medical services.
Many of the decisions taken by the Cabinet constituted attempts to appease the wrath in the Egyptian street, expressed so vociferously in the form of demonstrations or walkouts. As soon as the demands of one sector were granted, another sector would hold another sit-in or rally. In its 20 February issue, Watani International reported extensively on these demonstrations and demands. Among the sectors which demonstrated to make their demands heard were the spinning and weaving sector; the banking and money market sectors; and even the police. The general feeling is that now is the right time to demand more privileges. The government responds by granting privileges, which induces more demands, dragging the community into a vicious cycle.
In light of these decisions, will the State budget be burdened with the losses incurred today for years to come?