Fired by a new and invigorating spirit, the government's economic group is scrupulously putting theory into practice, writes Ibrahim Nafie Judging by decisions issued so far it is clear that the members of the economic group are working in close coordination towards specific targets aimed at putting the Egyptian economy on a new and robust footing. It is also clear that they have embraced a new way of thinking, one that seeks to free Egypt from the separate fiefdom mentality that has long governed the national economy. If the economic team has its sights trained on a single objective -- increasing economic growth rates -- it also realises that reform has the greatest chances of success when it takes place in a situation of calm. This belief is not only reflected in the measures team members have introduced, but in their eagerness to reassure the public and keep us abreast of their progress. Moreover, their statements and reports in this regard are a far remove from the hollow reassurances and verbal gymnastics that once characterised officials' attempts to placate the public. This fresh and intrepid spirit inspires confidence and enhances the conviction that Egypt is embarked on the long overdue changes necessary to foster growth and development. The climate is more conducive than ever before for the implementation of a comprehensive vision for integrated reform, a vision that has finally put paid to tedious wrangling over whether to focus on economic, political or social reform, as if they were somehow mutually exclusive. How often we have had to listen to angry exchanges between those who maintained that economic development could be achieved independently of political development, and those who urged political and social reform first, before embarking on an economic recovery project? It is no wonder that those countries that indulged in this debate and conducted reform on the premise that economic, political and social reform are entirely separate spheres suffered severe setbacks and social upheavals. Conversely, nations that operated on the premise that the economic, political and social spheres inherently impact upon one another and that progress in one must be compatible with and help stimulate progress in another succeeded in engineering smooth, balanced, sustainable and rewarding reform experiences. The latter approach is the one to which Egypt now subscribes, as is evident from the president's address upon the swearing in of the new cabinet, the guidelines he gave for the process of comprehensive reform and the close attention both to detail and the prerequisites for integration that is exhibited in the various reform plans and projections. As a result we now have in place the groundwork necessary to ensure that activity in each sphere meshes with and feeds the other. For example, it is impossible to imagine how substantial economic reform could be achieved without the necessary legal infrastructure, and the question of legislation immediately raises the question of political reforms. Within the economic sphere it is impossible to envision development in one sector without commensurate development in others. That our economic team realises this is evident in its recent decisions concerning custom tariffs, fiscal and banking measures and income tax. A finely-tuned surgical operation has been performed upon an antediluvian customs structure that some international reports have described as the most complicated and obscure system in the world. The team's decisions were based on studies undertaken jointly by the ministries of finance, industry, foreign trade and investment over a period of 53 days. The result is not only a significant reduction in tariffs but also a streamlining of customs procedures and the elimination of ambiguity and unnecessary red tape. When in operation these reforms will offer incentives to investment and eliminate sources of corruption, contributing to the generation of a healthy investment climate that will, in turn, stimulate national industry. As the primary objective of these measures is to boost economic growth rates we should not balk at any short term fall in customs revenues or the impact of this on a very narrow sector of interests. These reforms are vital, and we have put them off far too long. Instead of facing our problems head on and taking the decisions needed to remedy their root causes we opted for palliatives. But this is no longer the case. As with any radical surgical intervention we realise that some painful short term side effects are inevitable, but we must keep our sights trained on longer-term. True, some may suffer from the reductions in customs tariffs, especially those who have stockpiled on commodities that now carry lower duties. However, whatever grumbling we hear will not last long once prices drop, which indeed has already begun at the initiative of some merchants who have announced price reductions in their products in response to the decision to reduce customs taxes. One of the effects of price reductions, which the Egyptian people will feel immediately, will be the reinvigoration of markets. Four years ago the automobile market registered annual sales of 110,000 new cars. This figure has plummeted to the current annual rate of 42,000, a dismal figure when compared to the Turkish automobile market, which records an average of 650,000 sales, and a further 600,000 exports. We have had a similar plunge in sales of consumer goods, which are down by 25 per cent from four years ago. Such statistics drive home the fact that we can no longer afford to recite slogans rather than tackle problems face on. We have to make a new and objective assessment of our resources and strengths and, on this basis, draw up ambitious but realistic plans for economic development. The reforms the economic group has instituted in the banking sector are inspired by the same principle of mutual rebound effects between the economic sectors. I should add, here, that this new spirit has also inspired officials to proceed in implementing new policy without the familiar media fanfare. At the same time they have been forthcoming in their responses to any questions from the public, as was the case with Dr Farouk El-Oqda, the eminently capable governor of the Central Bank. No sooner had I asked, in one of my columns, about the reasons behind the interest rate hike instituted by two public sector banks than Dr El-Oqda contacted me and provided me with such a clear and thorough answer that I could not help but feel reassured that a new way of thinking and a new spirit of harmony are far more than just mottoes for the economic group. Moreover, those now driving economic policy are clearly motivated by a sincere dedication to the welfare of those on limited incomes, which is in keeping with President Mubarak's clear and unequivocal exhortations in this regard. The decisions regarding income tax reforms are designed to expand the income tax base while alleviating the burdens shouldered by the individual citizen. The purpose of the reform is to increase the state's tax revenues so as to better enable it to improve government services to the public, especially those serving the lower- income strata of society. With this last component of the new spirit in place, I have no doubt that Egypt is now firmly on the course to true and comprehensive reform. However, I should caution that this is not the type of reform to examine with blinkered eyes. There is a comprehensive philosophy behind the work of Egypt's financial and economic policymakers and we must allow the current team an opportunity to put it into practice. This philosophy is grounded not only in a realistic assessment of our resources and capacities, but also upon a careful calculation of our interests and our international obligations, on which we must not renege under any circumstances. I refer here specifically to such treaties as the EU partnership, GATT and COMESA. Finally, I urge patience. We have many long-standing and complex problems to overcome, and this cannot not be done overnight, no matter how diligent we are. So, let's give our economic team the time for its ideas to bear the fruit, and to raise Egypt to the ranks of emerging nations.
