Is the government able to achieve the presidential electoral programme promises within its sixth five-year plan? Mona El-Fiqi tries to find an answer The new five-year plan which will be applied from fiscal year 2007-2012, is scheduled to be discussed this week before being approved by the People's Assembly. While officials keep announcing that the government is committed in its sixth five- year plan to achieve economic, social and political reform as President Hosni Mubarak promised in his presidential electoral programme in 2005, experts believe that the government's plan as recently announced by the Ministry of Economic Development is too rosy to fulfil. "The sixth five-year plan is a clear translation of the presidential electoral programme which is considered a commitment to the government and it will continue its efforts to apply economic, social and political reform with transparency," said Osman Mohamed Osman, minister of economic development, in his statement about the plan at the People's Assembly two weeks ago. The plan includes improving the economic growth rate, raising the number of school and university students, increasing investments, reducing the unemployment rate, improving living standards, developing the southern governorates, and providing better health services. The plan is committed to improve the human development sector to achieve the New Social Contract set by the United Nations. The government intends to apply the UN programme by 2012 before the UN 2015 target. This programme includes reducing the poverty rate, fighting illiteracy, decreasing the infant mortality rate and providing a comprehensive care programme for Egyptian families. In a seminar held last week in the Press Syndicate, Osman said the GDP growth rate so far in 2007 is estimated at seven per cent and it is expected to reach 7.4 per cent. So the government's plan aims at a growth rate of eight per cent during the coming five years. This rate, according to Osman, should be easy to fulfil since it depends on some high potential and growing sectors such as industry which was able to raise its share in total GDP from 13 per cent in 2005 to 17 per cent in 2006 and is expected to reach 20 per cent in 2007. While government officials are proud of achieving an increase of seven per cent in GDP, experts have doubts about this figure. Hamdi Abdel-Azim, a professor of economics and ex-president of Al-Sadat Academy for Management Sciences explained that the official growth rate is not a real one since it ignores price increases. The inflation rate, according to the Central Agency of Public Mobilisation and Statistics is estimated at 12.8 per cent so the total GDP increase is really due to inflation. "This does not express a real increase in local production but only in prices. If the increase of GDP is seven per cent and the inflation rate is 12 per cent, the real growth rate is negative five. This is called money illusion," said Abdel-Azim. There are many reasons according to Abdel-Azim for the seven per cent GDP increase figure which doesn't express a rise in production, such as the increase of international oil prices. "Oil represents 40 per cent of Egyptian exports, and there is the increase of Suez Canal revenues and tourism in consequence of Lebanese political instability last year which is a none-time phenomenon," added Abdel-Azim. The plan includes the application of some procedures to help achieve a higher growth rate in the industrial sector; for example, the government will establish 885 huge factories and 1,850 medium size factories. The industrial strategic plan includes focussing on highly competitive activities such as electronics, auto parts and the development of comprehensive industrial zones. The plan also aims at boosting the IT sector to achieve an 11 per cent growth rate. According to Osman, the tourism sector is expected to achieve a 10 per cent growth rate and to raise its total revenues from $7.7 billion to $12 billion by the end of the five-year plan. The agriculture sector is expected to grow by 4.3 per cent annually, twice the rate of population growth, with the addition of 900,000 feddans to cultivated land. The construction sector is expected to continue its present growth rate of 17 per cent. The transportation sector is also expected to grow at a rate of 11 per cent. To boost these sectors the plan is locating LE1,295 billion as total targeted investments for the coming five years. These investment will be directed to different sectors such as electricity, industry, agriculture and irrigation, construction, transportation, trade, education, health, oil and gas, IT, administration development, tourism and services. The unemployment issue has a priority: 640,000 additional jobs will be created each year, creating a total of 3.2 million new places by the end of the plan. But according to Osman, that would just leave the unemployment rate at its current level estimated at 9.3 per cent representing two million unemployed individuals. Osman added that to reduce the unemployment rate, 750,000 job should be created annually, which would reduce unemployment to 1.4 million and bring the unemployment rate down to 5.5 per cent. Abdel-Azim argued that, "the average increase in job opportunities during the past 20 years was 450,000 jobs. If more efforts are exerted, this figure can be moved up to 500,000 but it is impossible to achieve the government's target." Abdel-Azim explained that the government depends on the private sector in providing job opportunities and that jobs available in the private sector are often seasonal, not permanent. As for education, the government plans to raise the number of students to 22.3 million by the end of 2012. The plan also includes a programme to reduce the illiteracy rate from 28 per cent in 2006 to 20 per cent. However, Abdel-Azim argued that increasing the number of students is not enough. "The real problem is the quality of educational service provided in schools and universities. University students don't even have enough chairs. The government should be more concerned about improving the quality of education than the number of students." According to Osman the government succeeded in raising the individual's total annual income from LE5,750 in 2001/2002 to LE9,865 in 2006, representing a 3.5 per cent annual increase, but Abdel-Azim argued that these figures are inaccurate since they do not consider the changes in prices. The plan aims that by the end of the five years individual annual income will reach LE13,000, a six per cent increase. Osman admitted that the projected increase of income is conditional on controlling the inflation rate and reducing its figure to six or seven per cent. Abdel-Azim agrees with Osman that to reduce the inflation rate, balanced monetary policies should be applied.
