The NDP's economic team recently showcased how policies adopted in the past three years are paying off. Yasser Sobhi reports Gamal Mubarak, head of the National Democratic Party (NDP) Policies Committee, accompanied by the cabinet's "three musketeers", Minister of Finance Youssef Boutros- Ghali, Minister of Industry and Foreign Trade Rasheed Mohamed Rasheed and Minister of Investment Mahmoud Mohieddin, showcased the NDP's economic achievements in a press conference last week. The statistics record an increase in the real gross domestic product (GDP), employment rates, private sector activity, investment rates and exports, as well as a stabilised foreign exchange market. "We are targeting seven per cent GDP growth within three years and investments generating more than 700,000 jobs every year," said Boutros-Ghali. "We expect economic growth of over five per cent and over 500,000 employment opportunities per year." The GDP growth rate rose from 3.2 per cent in 2001/2002 to 4.4 per cent last year and government estimates anticipate an increase between 4.9 per cent and 5.5 per cent for the current fiscal year. Mohieddin cited the soaring number of employment opportunities advertised in the Arabic-language daily Al-Ahram newspaper as indicative of an economic recovery. In the first week in January, job listings increased from 47 in 2004 to 233 in 2005, and from 89 in the third week of March to 1,117 during the same period this year. NDP policies aiming to foster a private sector capable of leading Egypt's economic development have also been rewarding. Foreign direct investments are expected to increase from only $408 million in 2004 (excluding investments in the oil sector) to more than $1 billion by the end of the fiscal year, even though almost 70 per cent of these investments are through what Mohieddin referred to as "the public asset management programme". The stock market is also booming despite a setback last week, reflecting the economic recovery. Market capitalisation has increased from eight per cent of GDP in 1990 to 44 per cent in 2002/03 and 55 per cent in 2004. All stock indexes have increased substantially, and the Case 30 index (the 30 most active stocks) has shot up by 149 per cent since January. "It is a positive reaction to the good economic policies adopted by the government," said Rasheed. "Corporate profits have increased by 30 per cent to 40 per cent and the stocks price increase reflects a real development." He said that from 2002 to 2005, exports have increased by 41 per cent, as measured in dollars. Egyptian exports to the EU are up by 67 per cent, to the Arab countries by 23 per cent due to free and preferential trade agreements, while exports to the US have increased by 77 per cent. As for inflation, Rasheed said that it fell from 18 per cent last year to 11.4 per cent this year and is expected to continue decreasing. He also predicted that inflation will be reduced over the next 18 months to an easily manageable three to six per cent. "There is an increasing confidence within the economic society that is reflected in the stock exchange and the currency market," said Boutros-Ghali. "The improvement in the balance of payments and in the current account doesn't justify what is happening in the exchange rate market. It's rather the increase in confidence that makes people change their dollars to the Egyptian pound." Indeed, the monetary reserves in foreign currency has increased from $14.1 billion in 2002 to $17.36 billion in February 2005. Mohieddin stressed that the government is not targeting a certain amount, but that the rising reserves reflect an improving foreign exchange market. Conspicuously absent in the press conference was any discussion of how the government plans to deal with a dangerous budget deficit that went up by 10 per cent last year and is projected to grow further after the promised tax reform. The report also failed to address the effect of finance payments on the public debt, which comprise more than 30 per cent of the budget, on private sector finance and expansion. Also not mentioned were income distribution and the social aspects of economic reform. However, the Ministry of Finance did hint at an upcoming announcement that average incomes have increased in real terms.
