Stability and national reconciliation are of prime importance to any rebound in the economy, Prime Minister Hazem El-Beblawi stressed in an interview on state TV on Saturday. "The first thing I'm thinking of is reorganizing [certain] laws related to civil society and fighting corruption," he said. El-Beblawi also expressed his concerns over the country's fuel supply situation. "Egyptians don't [understand] our production can no longer cover our needs," he said, adding that energy subsidies have become "too expensive" for the state. "During the 1990s, energy subsidies amounted to EGP 1bn, but two years ago they reached EGP 95bn," he said. Fakhry El-Fekky, an economics professor at the Faculty of Economics and Political Science at Cairo University, said it is "difficult to suspend energy subsidies because this needs popular support, and [the public] isn't ready for it." Meanwhile, Dalia Mousa, head of the media division at the Egyptian Center for Social and Economic Rights said amending subsidies would further burden the state's budget, saying that "transportation fares will increase, so middle class citizens will be the victims." Savings to increase investments In his interview, Beblawi also expressed his support for the free market system, but with strong government regulation. "Egypt has no other choice but openness and cooperation with the world," he said. "In Egypt right now the consumption rate is 85% of GDP while the saving rate is 15% of GDP," he said. "In order to increase our investments we need [this savings rate to reach] 30% of the GDP." El-Fekky, who is also the former assistant of the executive chairman of the International Monetary Fund (IMF), said that increasing investments is one of the biggest challenges facing the new government, with last year's total investments standing at EGP 260bn, and EGP 300bn this year. "To be realistic, our savings can be increased to 20% only," he said. Mousa meanwhile said that investments must be made in the public sector for their social justice element. "Private sector investments haven't done any good for the poor since Mubarak's and Morsi's previous regimes," she said. Maximum and minimum wages El-Beblawi said he was the first to introduce a draft for a comprehensive law on the maximum and minimum wage. "I've submitted it to the former Prime Minister Essam Sharaf, and it was implemented under Ganzouri's regime. I think it is a priority now that must be implemented properly." The law, he said, put maximum wage at no more than 35 times the minimum wage. El-Fekky said that the government should work on raising the minimum wage in order to guarantee that this law will make a difference. On the other hand, Mousa said that the 35 multiple is too high, and "should be 15 times or less to achieve social justice." Aid and loans El-Beblawi also addressed concerns raised over the sudden influx of Gulf aid since the ouster of former president Mohamed Morsi, saying there is "no need to be sensitive" to such aid, as Gulf countries "truly respect and care for Egypt." He did qualify, however, that the aid would not be sufficient on its own to patch the economy. He also revealed that Gulf countries would be open to offering additional aid when Egypt achieves greater stability. El-Fekky said that El-Beblawi's government would also face the challenge of lowering prices. "I think this will be possible after the $ 12bn aid because the black market will disappear and the imports costs will decrease and in a result the prices will decrease," he said. He added that he believes if Egypt can achieve economic development over the next year, the $4.8bn IMF loan may not be necessary.
