When it comes to vital economic indicators, not everyone is as happy about the numbers as the government seems to be. Sherine Nasr reports Hosni Mubarak's 2005 election platform was certainly ambitious: voters still remember the president's promises to create some 4.5 million new jobs, build 1,000 factories, and boost investments, among other lofty goals to be pursued in his sixth term. With a growing subsidies bill and a recurrent trade deficit, however, the president's ruling National Democratic Party (NDP) and its government have found it challenging to implement some of this wide-reaching platform. While experts say evaluating the government's ability to pursue these long- term policies is premature, one thing is clear: "it has become more obvious now," said Gamal Abdel-Gawad of Al-Ahram's Political and Strategic Studies Centre, "that the government is determined to proceed with its liberal, market-oriented policy." And in some respects, this more friendly private investment atmosphere is paying off. "We can easily see an influx in the volume of foreign direct investment (FDI), particularly in the services and manufacturing industries sectors," Abdel-Gawad told Al-Ahram Weekly. Hardly a day goes by without a government official announcing some positive indicators of sound economic performance. According to statistics released by Finance Minister Youssef Boutros Ghali a few days ago, Egypt has managed to reach a growth rate of 6.9 per cent, "thanks to a sound economic performance that has become capable of generating more resources." Figures released by the ministry indicate a 13.2 per cent growth in investment in general this year, while the overall budget deficit declined by 1.6 per cent to reach LE50.8 billion. Positive as these statistics sound, the Strategic Economic Trends 2006 report issued by Al-Ahram's Political and Strategic Studies Centre re-examines the validity of some of the government's ultra positive figures. The report was critical of the decision to include oil sector investments and revenues from public asset sales amongst the FDI figures. "The investments pumped by drilling and exploration activities in the oil sector span a number of years and should not be included in one fiscal year," the report said. Even so, non-oil FDI increased from $408 million in 2004 to $3 billion in 2006. Tax and customs reform measures also seem to be paying off; for the first time, tax revenues, according to the ministry's figures, increased by 17 per cent despite the fact that taxes were generally reduced from 42 to 20 per cent. At the same time, though, more people paid -- 2.4 million up from 1.7 million last year. Customs reform also helped increase revenues by 21 per cent compared to last year. Despite this plethora of positive number-crunching, many economists remain unhappy with the government declared indicators. "There are some basic indicators to judge the credibility of any economic reform programme," said Mustafa Kamel El-Sayed, executive director of Partners-in- Development, a private think tank specialised in development research. "One of these indicators is being able to pump up investments equivalent to 28 per cent of the GDP, in order to achieve a seven per cent growth rate necessary to mitigate the unemployment crisis." For El-Sayed, this is one of the indicator figures that officials should spend more time publicly discussing. Another important indicator is the trade deficit; according to El-Sayed, it rose from LE7.834 billion in 2003/ 2004 to almost LE10 billion in 2004/ 2005. "Although the balance of payment recorded a surplus due to an influx of tourists, Egyptian workers' remittances, and revenues from the Suez Canal, all three elements are very sensitive and can be negatively and directly affected if there is an escalation of tension in the region," he said. El-Sayed also sees spiraling foreign debt and government expenditure as negative indicators. He pointed out that domestic debt compared to GDP increased to 65 per cent in 2005, from 60.4 per cent the previous year. He would also like to see an indicator showing how people are coping with a year of successive price hikes. "How people feel [about the economic situation] is not entirely a personal matter of their own," El-Sayed said, suggesting that very few families would likely report an improvement in their standard of living over the past year. Abdel-Gawad attributed that to a naturally slow process: "there is always a time lag between introducing major reform measures to the economy and increasing the individuals' income." Adopting a liberal economy, he said, tends to widen the gap between rich and the poor, which "is a major challenge facing any society that chooses to follow a free market economy. The government is yet to tackle this highly sensitive issue."
