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Egypt's finance minister sets his course for recovery Into the brain of Egypt's new finance minister, Samir Radwan on Egypt's economic growth, setting a minimum wage, big infrastructure investment plans, with zilch social services spending increases
"When looking at Egypt finances, you have two choices: either despair or be imaginative. I am of the second type," says Samir Radwam, minister of finance on Monday in a lecture at the Egyptian Centre for Economic Studies (ECES). Prognosis He sees a slowing down of economic growth, "If the economy achieves 3 per cent growth, I'd be very happy," relying on bankers reports that credit-to-deposit ratio stands at a low of 33 per cent as one of the proofs. As for the state budget "I will see a $2bn deficit this fiscal year [till 30 June] and $8-10bn in the next budget." Outside help There is, hence, an immediate need to broaden the fiscal space, continues Radwan which is: "Looking for means to win as many grants as we can." Gulf Cooperation Council (GCC) countries, he says, gave signals that they are ready to help - even Qatar, who saw tense bilateral relations with the previous regime. Radwan's stand on public v private "The cost of revolution is not high, though," comforted Radwan. For him, some demands are legitimate, which brought up the question in a cabinet meeting member once the new PM, Essam Sharaf was appointed, about the identity of the economy. But, says Radwan, we concluded that the "private sector will remain the main pillar of the economy: a message that would comfort the audience, mainly of big businessmen, tied to the previous regime.” Privatisation, however, will remain frozen. Radwan favours public assets to remain public, however to privatise management. He proposes to borrow Malaysia's experience. "The Khazana fund was created there to group all the public assets under one umbrella. They hired a world-class management, granted the authority to run, merge, acquire or liquidate whatever assets. Revenues increased tremendously." Radwan finds support from the minister of public works for this concept, who mentioned that the previous regime had already drafted a similar plan that could be approved. Big, big and bigger infrastructure investment The resourceful minister, said, paradoxically, that no new taxes would be imposed and no subsidies retrenched - even those which benefit the rich. Regarding social measures, Radwan promises no increase in education and health spending, such as on wages: "I have no fiscal space to increase current expenditure," he said ending the argument flatly, even before it starts. However, the ministry of economic planning is currently studying all options, including the possible restructuring of investment spending to redirect more funds towards infrastructure. The minister specifies that this means more buildings and equipment for health and education sectors and specific projects. The minister also pleads for redistribution of wealth through employment, explaining that this is a new trend that appeared worldwide after the economic crisis. The idea is to inject growth models with job creation, increasing the benefits to the masses. Regarding boosting growth, Radwan introduced a vision based on three pillars: one of which is to pursue pending projects, like housing. Small and medium enterprises are at the core of the second pillar: a medium-term plan. "SMEs need a godfather." Last but not least, Radwan advocates for a set of national mega projects: "We have a fantastic tradition: we are masters of mega projects. I am not talking about the pyramids, but of other, more modern projects, especially in the field of irrigation and dams," advocates Radwan, adding, also, low-cost housing, especially around the new industrial hubs. "The land is there,” he insists “in Ein Sokhna and east of Port Said." Minimum wage The minister of finance is currently leading the economic ministerial group to set a wage policy in coordination with the International Labour Organisation. “Minimum wage isn't going to solve all our problems. It would affect only 2.3 million civil servants, while the labour force is about 22 million.” The wage policy will "bind wages to inflation and productivity. In addition, the wage structure will include a minimum and a maximum wage." "Britain had a very good experience in legislation that allowedthe smooth implementation of the wage policy by spreading out the implementation throughout 5
