A senior Egyptian economic delegation won words of praise during a visit to Washington for carrying out major reforms and promised more in the near future, Khaled Dawoud reports from the US capital Ministers of finance, Youssef Boutros-Ghali, and investment, Mahmoud Mohieddin, were warmly welcomed in Washington this week for the major economic reforms they carried out in Egypt over the past year. In several events in which the two ministers took part on the fringes of their participation in the annual World Bank and International Monetary Fund (IMF) meetings this week, their American hosts dubbed them as members of Egypt's new economic "dream team", and expressed confidence in the future of Egypt's economy. In an interview with Al-Ahram Weekly, Minister Boutros-Ghali said he was satisfied with the positive reaction he received from other world countries and representatives of international monetary institutions for the major reforms carried out in Egypt recently. He said the ministers he met praised those reforms, and described them as "positive and bold". Boutros- Ghali promised more reforms in the near future, particularly in the fields of privatising government-owned banks and insurance companies, taxes and cutting down the red tape to make Egypt more attractive for international investors. He added that it was also necessary to carry out more improvements in infrastructure such as roads, harbours and other means of transportation. Boutros-Ghali and US deputy secretary of state, Robert Zoellick, said they discussed the possibility of expanding the joint Egyptian- Israeli-American Qualified Industrial Zones (Qiz) "in the near future", considering that a necessary first step towards starting negotiations on a free trade agreement between Egypt and the United States. In statements made after his meeting with Boutros-Ghali and Mohieddin, Zoellick, who served as the US trade representative before taking over his new post at the State Department, said he felt confident, after many years of scepticism, that the relatively new economic team in Egypt was serious in conducting reforms that would change the nature of the Egyptian economy. However, he added that he continued to expect more reforms in the near future. Zoellick also noted that the significance of beginning FTA talks between the US and Egypt "sometime in the near future" was that it would encourage the Egyptian government to carry out more sweeping reforms, besides the economic gains it would bring to the Egyptian economy. He also pointed out that the political reforms Egypt carried out recently, namely the multi-presidential elections, created even more confidence in the country's future, and stressed that both economic and political reforms should go hand-in-hand. During a briefing in front of the American Enterprise Institute, a major conservative think- tank in Washington known for its close ties to the Bush administration, Boutros-Ghali also touched upon the thorny issue of reducing US military aid to Egypt, and redirecting it to economic aid. Boutros-Ghali vehemently rejected such proposals circulated in the US House of Representatives by a minority of staunch supporters of the right-wing Likud government in Israel, and described it as "naïve". He pointed out that Egypt's military expenditures are the lowest in the region, 8.75 per cent of GDP, compared to other countries, which spend up to 12, and 14 per cent on military purchases. He added that Egypt "is a major regional power and it definitely needs a strong army to protect its interests and stability in the region." In another interview with Al-Ahram Weekly, Minister of Investment Mohieddin, reviewed the key reforms which Egypt has recently carried out, particularly in the fields of privatisation, freeing the exchange rate, taxation, tariffs, the stock market and reducing inflation. He said that all these reforms produced positive results such as the increase of the growth rate from three per cent two years ago to four per cent this year, and he expected it to grow further to 5-6 per cent next year. He also pointed out that foreign and local investments increased in Egypt by nearly 150 per cent, and he expected more investments in the future with the expansion of the privatisation programme. Boutros-Ghali and Mohieddin said they expected the privatisation of the first government- owned bank of Alexandria to be concluded by the end of this year, as well as merging several smaller banks and selling the government's share in several jointly-owned banks. Asked why Egypt continued to rank low in a recent World Bank report on Doing Business (141 out of 155 countries reviewed by the bank's private sector arm, the International Finance Corporation), Mohieddin said the report was not necessarily up- to-date as it only covered the situation in 2004, while many major reforms were carried out since the beginning of this year. "A lot of the economic reports issued recently cannot catch up with the speed of reforms we are carrying out in Egypt," he said. Mohieddin expected Egypt's rank to improve significantly in the same report next year. Despite its low ranking on the world level, the Doing Business report ranked Egypt among "the top reformers in 2004". Egypt came sixth after Serbia and Montenegro, Georgia, Vietnam, Slovakia and Germany. The report said "some of the boldest reforms, driving the biggest improvements in the Doing Business indicators" were "Egypt's streamlining of customs procedures and trade documents". It also praised Egypt's establishment of "a single window for trade documentation, merging 26 approvals into five. A time limit of two days for passing through customs now applies. Improvements in customs were part of a broader reform to cut the number of tariff bands from 27 to six and simplify inspection procedures at the border."
