While the economy may be geared towards unprecedented growth, average citizens have yet to taste its fruit. Sherine Abdel-Razek listened to the debate at the Euromoney conference Economic indicators have realised record improvements over the past four years, a fact which Prime Minister Ahmed Nazif's government has been flaunting at the last four Euromoney conferences in Cairo. The scenario is not much different this year, except that both government and business sector delegates agree that much needs to be done on the social front to sell the people the success story. Following a summer of discontent, with demonstrations triggered by water shortages, anger over spiralling inflation and public uproar against selling another public bank, Banque du Caire, this year's conference presented the government with a platform to deliver promises on social welfare. "For the coming 12 months, social aspects are our top priority," declared Minister of Finance Youssef Boutros Ghali. While boasting an exceptionally high growth rate of 7.1 per cent in fiscal year 2006/2007 -- the highest in 20 years -- Ghali noted that what really matters now is to improve the quality of this growth by reaching out to all strata in the economy. "Our main concern is to make sure the entire society feels it," he asserted. "Fast, sudden growth benefits those who can read information and understand the techniques of supply and demand and use it to their benefit. Those who lack such knowledge are sidelined." From the private sector, Taher Helmy, head of the law firm Helmy, Hamza and partners, summarised the problem by saying that the government and private sector were too absorbed in pushing growth, "that we neglected to convey an important message to people: this is for their best interests." Helmy, who is the former chair of the American Chamber of Commerce, continued that "more awareness by the public is needed to accept the policies we are advocating in order to maintain this pace of growth." Minister of Investment Mahmoud Mohieddin also assured delegates that economic reform was well underway, but when the average citizen will feel its rewards is unpredictable. "For the trickle- down effect to take place, we need investments, resources and growth," Mohieddin pointed out. While all three factors are currently found in Egypt, the minister continued, other elements such as extending transportation networks, improving infrastructure and introducing enabling educational techniques are still needed. According to one analyst, the people are already reaping the benefits of a booming economy as witnessed by the increased demand on consumer products. But the majority experts believe it will take some time yet. "The main challenge in the coming period is managing the expectations of the people," believes Ghali. "We don't promise to change their lives tomorrow; we can't change 50 years of mismanagement in a couple of years." In his opening remarks, Richard Ensor, managing director of Euromoney conferences, stated that non-oil exports increased by 40 per cent during fiscal year 2006/2007, subsidies are lower and foreign direct investments (FDIs) almost doubled to reach $11 billion. "The economic management is superior and I can say that you never had it so good," Ensor told participants. "The CASE [Cairo and Alexandria Stock Exchange] is still one of the hottest, not only in the region but worldwide." A report prepared by Standard and Poors was referred to in many discussions at the conference, namely the fact that Egypt ranked third among 12 emerging economies as the least possible to be affected by the credit crunch in international markets. Ghali noted that the GDP growth rate is unique because it is fed by different elements, including an increase in consumption, FDIs and investments. "The faster we grow, the faster we can grow," he asserted. "I know the growth rate can reach 8-8.5 per cent very soon." The minister continued that one of the main problems which was overcome is the fiscal deficit. Three years ago, the cash deficit was nine per cent of GDP but today it is 5.3 per cent -- a figure that is much lower, but still high in the medium term. Ghali also presented an ambitious plan which will soon be introduced to reach out to the less privileged. It comprises of a social safety net where around 1.2 million families will receive monthly allotments of cash and commodities. Moreover, his ministry is working on a new special pension scheme where anyone above 60 years old will receive a monthly allowance. With as much as four pounds of each five spent on subsidies by the government not reaching the targeted poor, a new system of delivering subsidies is being drafted. Public Private Partnership (PPP) was the buzz word at the conference, and was promoted as the panacea for some social woes. "Improving the quality of services, especially for low income brackets, is high on our agenda," affirmed Ghali. "This is where the new trend of PPP comes in." According to PPP, the private sector will build and manage schools while the government will rent the facilities from them and pay tuition fees for the students. Another form of PPP projects have private companies building and running water stations, while the government buys the water and then sells it at a subsidised price to the people. "This is the essence of the phase ahead," revealed Ghali. "More involvement by the private sector to free the government of budgetary constraints." While real estate investments and price hikes for residential units and land attracted much attention at this year's Euromoney conference, the government highlighted plans to lift the burden of property tax for those in the limited income and lower medium class brackets. "The property tax will be reduced to only 10 per cent from the currently exaggerated 46 per cent," assured the minister of finance. Moreover, those owning units worth less than LE300,000 will be totally exempt from the tax.
