Prime Minister Ahmed Nazif told the Shura Council this week that though Egypt is not immune to the global financial crisis, the economy is strong enough to ride out the storm Addressing the upper house of Egypt's parliament this week, the Shura Council, Prime Minister Ahmed Nazif was upbeat about the prospects of economic growth in Egypt over the coming period, saying that the government had wrapped up a package of economic policies aimed at containing the shock of the global financial meltdown, reports Gamal Essam El-Din. These policies, he said, included boosting spending on local fast-return projects, prompting banks to lend a greater volume of money to local investors, fighting unemployment, upgrading internal trade and attracting more Arab investment to Egypt. In spending terms, Nazif said the government had asked parliament to amend the 2008/2009 budget and to approve an additional allocation of LE13.3 billion. Nazif said this was expected to increase to LE15 billion the amount to be spent on a number of essential projects. "We plan to spend this money on completing a number of unfinished projects, though we might also need an additional allocation to fund another list of projects and retain confidence in the Egyptian market," he said. Nazif indicated that an initial amount of LE10.5 billion would be earmarked to fund local development and labour-intensive projects, with the objective of fighting the recession and injecting liquidity into the economy. Nazif also said that the government was urging the country's banks to invest more in public projects, among them a project to build a railway line between 10th of Ramadan City and Cairo and another to build a network of bakeries in Suez. "The crisis should not dissuade us from spending on such development projects, given their economic returns over the long term," he said. Regarding internal trade, Nazif said Egypt was in need of as much as LE48 billion to upgrade this vital sector. "This amount is necessary to build an integrated network of warehouses, stores and hypermarkets in Egypt," he said. Nazif said that Egypt had always been a safe haven for Arab investment, commenting that "Arab investors come to Egypt because they know it is a secure place and that it has a good record for profitable projects." Nazif indicated that the government would do everything it could to ensure that the annual value of Arab investment coming into Egypt stood at $10 billion at least. A number of projects ready to receive Arab investment had been set up, he said, including a new "technology valley" in the Maadi district of Cairo, the upgrading of a number of oil refineries in Suez, and the establishment of two large-scale housing communities in the desert. During Nazif's address, the electricity was cut off three times. The microphone having gone dead, Nazif, who found himself in total darkness, was forced to raise his voice so that MPs could hear what he had to say about the global crisis. Shura Council Secretary- General Farag El-Dori has formed a technical committee to investigate the cause of the blackout. The Shura building is still under restoration from a fire which gutted it in August last year. For his part, the country's Finance Minister Youssef Boutros Ghali said the government was not trying to paint too rosy a picture of the economy given the current international crisis. "Our economy will be hit hard by the global financial crisis next year, or when state revenues from exports, tourism and the service sectors face a big decline," Ghali said. This would cause a major slowdown in the country's economic growth, he said, the immediate effects of which would be felt by poorer citizens. The crisis had "pushed the government to ask parliament for a new budgetary allocation in the form of the LE13.3 billion," Ghali said, indicating that this amount would be covered by issuing bonds and treasury bills on world markets. "This amount is necessary to keep the local market afloat and to make Egypt more immune to the global financial crisis," Ghali said. He went on to launch an attack on "those who have accused the government, and the Finance Ministry in particular, of profligacy and pushing public debt to dramatic levels." Ghali said that the sensible policies of his ministry in consolidating the country's banks, upgrading tax and custom regulations, and launching a massive economic reform programme had resulted in a slashing of public debts. "Public debt accounted for 102 per cent of GDP four years ago, but now it accounts for just 67 per cent," Ghali said, in an allusion to accusations of financial irresponsibility made against the government last week by Gawdat El-Malt, chairman of the Central Audit Agency.
