Gamal Essam El-Din reports on a USAID grant aimed at upgrading financial services and economic performance The Shura Council -- Egypt's upper house parliament -- on Saturday approved a multi-purpose USAID grant aimed at globalising the national economy and opening it up to foreign competition. To achieve what is considered a strategic objective, the grant estimated at $142.5 million seeks to turn Egypt into a favourable environment for regional and international business and trade. "This," said a Shura Council report, "will come through three dimensions: upgrading the financial sector, improving economic and investment services and evaluating the government's performance in providing these services." The USAID grant aims to reinforce the supervisory powers of the Central Bank of Egypt (CBE) and boost its role in charting monetary policies and reducing inflation. The report said that "the grant also seeks to help national financial institutions expand in the funding of mortgage activities." The grant also seeks to improve the legislative framework of the mortgage business and assist in establishing a modern national system of property registration. Upgrading the financial aspects of the Water and Sanitary Drainage Authority is one other objective of the grant. The report described this as "necessary because the provision of water supplies and drainage services plays a key role in the development of real estate and mortgage activities". The grant purports as well to help upgrade the performance of the Finance Ministry's institutions. It "will help the Finance Ministry implement the newly-issued tax law in a transparent and effective manner and merge the sales and income taxes into one department, as a step in eliminating bureaucracy in the tax authority," the report said. Referring to the second objective of the grant, the report said that this is to set up a "National Committee for Upgrading Economic Legislations (NCUEL)". Addressing the launch ceremony of NCUEL on 17 April Justice Minister Mahmoud Abul-Leil had said that the committee that will be headed by the prime minister will include "distinguished representatives" from the business associations, chambers of commerce, and federation of industries. The major task of NCUEL is to undertake responsibility for upgrading all economic legislation as a key step towards creating a more investment- friendly environment. "NCUEL will for instance take charge of revising and streamlining key legislations in banking, taxes, customs, capital market, investment and electronic trade," said Abul-Leil. To attain this NCUEL will undertake "comprehensive" studies of economic and financial legislation so as to ensure that it falls in line with the market economy in a way that will facilitate economic, business and investment activities. Abul-Leil indicated that the law taking priority on NCUEL's agenda will be that of establishing economic courts. "This is a key legislation targetted at facilitating and accelerating the settlement of economic disputes," Abul-Leil said. Deputy US Ambassador in Cairo Stuart Jones indicated that the USAID agreement stood at $57.7 million when it was signed in February 2004. "Within one year the grant's amount was increased by around $100 million, to climb up to $142.5 million," said Jones. This increase, he indicated, will help the government liberalise the economy and accelerate privatisation especially in the banking sector. According to Jones, the strategic grant also aims at promoting the Egyptian economy's competitiveness. "The phasing out bureaucratic obstacles and adopting new innovative ways -- such as the QIZ (Qualified Industrial Zones) agreement with Israel -- help achieve this major objective of the USAID's strategic grant," said Jones. According to the Shura Council's report the grant will support the Ministry of Investment's efforts in phasing out bureaucratic obstacles and facilitating investment services. Referring to the grant's third objective the Shura report said that it aims to make a first-hand evaluation of the reform attained in the financial and economic sectors. "This evaluation will take into account Egypt's position on the World Economic Forum's International Index of Competitiveness, in addition to the percentage of banking default loans and the impact of upgrading economic laws on the business and investment climate," the report concluded.
