The presidential poll will take place before a backdrop of economic woes. The budget deficit has ballooned. There is a deep-rooted energy crisis and foreign investors continue to give Egypt the cold shoulder. Unemployment and inflation are compounding already high levels of poverty in a country whose population — emboldened by two revolutions — is unlikely to shy away from taking to the streets. So what are the candidates promising on the economic front? While Hamdeen Sabahi has issued an 81-page manifesto Abdel-Fattah Al-Sisi, far and away the favourite, hasn't revealed his plan yet. The reason? “So as not to raise a lot of unnecessary debate,” according to his campaign team. “The whole country knows Al-Sisi will be the next president. Economists realise recently introduced economic policies have been tailored to make his task easier. So why put out a plan now?” asks Omar Al-Sheneety, Managing Director of Multiples Group, a regional private equity firm. On the basis of economic policies pursued in the last nine months, many observers anticipate an expansionary policy financed by Gulf aid. What they are not expecting are measures — like the wholesale cutting of subsidies — that might stir instability. Given that Al-Sisi enjoys the backing of the business community, analysts also expect the private sector to be given a broader role in the economy. In contrast Sabahi promises a restructuring of the public sector, with greater prominence given to cooperatives, a stronger focus on small and medium-sized businesses and greater dependence on local sources of finance. Sherine Al-Kadi, Chairman of Prime Holding, a leading investment bank, feels that the received wisdom may well be wrong. “What has been revealed of Al-Sisi's economic plan so far has been a surprise. We expected a continuation of the capitalist paradigm but he appears to support a wider role for the state.” In two televised interviews Al-Sisi called for a greater role for the state in planning, investment, production and even in market surveillance. He asked Egyptians to “tighten their belts, share sacrifices and be patient until things improve”. Improvement, he predicted, will take two years. “Neither candidate's programme offers much in the way of policy steps that will enable them to meet their promises. There's a lot of rhetoric but precious few details,” says Heba Khalil, deputy head of the Egyptian Centre for Economic and Social Rights (ECESR). “Take unemployment. When 13.9 per cent of Egyptians are jobless Al-Sisi's suggestion that thousands of young people be provided with carts so they can sell vegetables and meat hardly constitutes an employment strategy.” But is Sabahi's plan to provide micro-finance of LE1,000 loans, or a feddan of desert land and LE10,000 to those willing to reclaim it, any more realistic? “We are targeting very small projects and the funding could be increased to LE5,000, enough for small-scale handicrafts like rug making,” insists Abdel-Khalek Farouk, the Sabahi campaign's economic advisor. Al-Sisi wants energy-saving light bulbs, and has hinted at legislation to enforce their use — they could, it is claimed, save 4,000 megawatts — but he says the removal of bread and energy subsidies can only be done gradually and can't be implemented without first raising Egyptians' income because “people won't tolerate it”. Al-Sheneety isn't convinced. “This is just election talk. The latest budget raised electricity, cooking gas and water tariffs without any improvement in the social safety net for the poor. Al-Sisi will continue along the same path.” Sabahi's approach to subsidies involves massaging figures that Farouk says do not reflect the real situation. “The figures that appear in the budget are inflated. They do not reflect what the government pays but the difference of the cost of producing energy and international market prices. They inflate the cost to the government by 50 per cent.” Yet energy subsidies, expected to reach LE130 billion this year, eat 20 per cent of the state budget. Al-Sisi's campaign has made great play with the so-called “development corridor” plan, a scheme to populate the desert by providing infrastructure to reclaim four million feddans and facilitate ownership of the land by the people who work in it. “There's a lot of talk about populating the desert. All I know is that there is insufficient subterranean water to irrigate the area that is being spoken of,” says Farouk. Al-Sisi will depend on Gulf aid and remittances from expatriate Egyptians to finance his economic projects. Egypt has received more than $20 billion in aid from friendly Arab states since 30 June, says the presidential favourite. He has promised that his first visit as president will be to Saudi Arabia. “But the government can't depend on remittances to finance its investments,” points out Al-Sheneety. “Egyptian workers abroad are mainly from the lower and middle classes. They send money to their families not to the government. Perhaps Al-Sisi means they will be taxed, or he expects them to donate money.” The second suggestion may not be wide off the mark. “Of the nine million Egyptians educated in Egypt's schools and universities and now living abroad how many have considered giving a month's salary to support the poor in Egypt?” Al-Sisi asked in March. Sabahi, who enjoyed warm relations with the Saddam regime in Iraq and has called for diplomatic ties with Iran, is unlikely to be able to attract much Gulf money if he comes to power. But then, insists Farouk, no country has ever implemented a successful development programme wholly dependent on foreign aid. Restructuring government bodies, cutting operating costs and securing the return of money smuggled out of Egypt by Mubarak-era regime cronies would, argues Farouk, provide much needed finance. “There are tens of unnecessary advisers in our embassies abroad who cost at least $10-15,000 per month.” Eradicating such sinecures, he says, could save LE2 billion a year. But this is peanuts, insists Ashraf Al-Gazaierly, head of the Egyptian Junior Businessmen's Association (EJBA), when “we need $1.4 billion for petrol every month.” Former defence minister Al-Sisi makes no bones about a larger economic role for the military which is already involved in major infrastructure projects. Al-Sheneety is concerned that there is a danger of the army crowding out the private sector. Yet he, like Khalil, believes that even under Sabahi the army will play a bigger economic role as its political influence widens. But the private sector might still retain its edge. In the pursuit of Gulf investment Al-Sisi's administration is expected to develop a more attractive overall investment climate. “Al-Sisi believes that the business sector is key to Egypt's development and only it can bring money into the country,” says Khalil. “It is a model that has consistently failed since the early 1990s.” A majority of businessmen support Al-Sisi, says Al-Gazaierly, because “he brings the promise of stability and has a track record over the last nine months of sending positive messages to investors about the future.” While Sabahi is promising workers a larger role in the economy, and has said he will re-nationalise some privatised companies, Al-Sisi has made it clear in interviews he has little patience with workers' demands. The government doesn't have the money to cover them, he told viewers. “I am afraid Al-Sisi will continue the repression of labour. Recent legislation criminalising strikes is anything but positive,” says Al-Gazaierly. (see pp. 2-4)
