[P2P-F] Fwd: Article : Egypt Takes a Step Back From IMF Ways

Mon Feb 21 02:47:47 CET 2011

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From: Dante-Gabryell Monson <dante.monson at gmail.com>
Date: Mon, Feb 21, 2011 at 8:41 AM
Subject: [P2P-F] Article : Egypt Takes a Step Back From IMF Ways
To: p2p-foundation <p2p-foundation at lists.ourproject.org>

http://www.truth-out.org/egypt-takes-a-step-back-from-imf-ways67925
Egypt Takes a Step Back From IMF Ways

Saturday 20 February 2010

by: Emad Mekay  |  *Inter Press Service |
Report*<http://www.ipsnews.net/news.asp?idnews=54544>

Cairo - Egypt could soon be looking for a new economic model – one that will
be different from the traditional system that has been promoted for years by
international financial institutions such as the World Bank, the IMF, and
the U.S. Agency for International Development (USAID), under the reign of
ousted president Hosni Mubarak.

"Lots of Egyptians after the revolution realized the level of injustice
against them, and that they were being ripped off for many years," Abulezz
Al-Hariri, a former opposition member of parliament, told IPS.

"They started asking for their rights," he added. "This cabinet is just
trying to cater to that immediate realization."

Since the mid 1980’s, the World Bank, the IMF, and USAID have sought to
encourage policies that limit the role of government in the economy, cut
budget deficits, and give more influence to the private sector and
corporations.

Under pressure from the public following the success of the January
revolution, the government of Prime Minister Ahmed Shafiq - originally
appointed by Mubarak but kept by the military to run the everyday affairs
until new elections are held - quickly rolled back some of the controversial
policies.

Many of the moves announced over the past few days are designed to be a
quick fix to the economic situation faced by millions of Egyptians who are
eager to enjoy concrete benefits of the 18-day revolution in which 365
protesters died.

The new government has announced that all citizens are eligible to apply for
monthly portions of sugar, cooking oil, and rice. The previous cabinet,
which was comprised of businessmen and former corporate executives, had
frozen the rations.

This decision overturned the previous policy of providing monthly rations
only to those who prove they are poor through a lengthy process of paperwork
and red tape.

Last week, new finance minister Samir Radwan said that the country will not
change its current subsidies system, which offers reduced food prices for
some 65 million Egyptians.

Furthermore, the new government promised to offset any extra cost in food
prices that might accompany rising prices internationally. Radwan put the
initial cost at 2.8 billion Egyptian pounds (about 425 million dollars).

Under the new policies, the health ministry will offer free health care 24
hours a day at public hospitals. Days before the Jan. 25 revolution, the
Mubarak regime had limited free health care hours from 8:00 am to 1:00 pm.

Temporary workers who have spent at least three years working for the
government will now be given permanent contracts that carry higher salaries,
and benefits such as pension plans, and health and social insurance.

Many municipalities also saw long lines of applicants after the interim
government said that it will offer subsidized housing for young people on an
expedited basis.

And on Wednesday, the Central Bank of Egypt said it will be a "guarantor" to
achieve the demands of banking sector employees, which include curbing top
management compensation packages and salaries as well as offering greater
benefits for employees.

But while the new measures remain limited, their implementation has raised
questions about whether Egypt may be heading back to its strong socialist
past, which flourished under the rule of former president Gamal Abdelnasser,
who ran the country in 1950’s and 1960’s.

Some officials say that the new programmes constitute an initial reaction
from a team known for its pro-capitalist background and are only temporary.

"We are not moving back to a socialist past," Amina Ghanem, deputy finance
minister, told IPS. "We are just trying to extinguish fires."

"We are not going to lose our reforms," said Ghanem, who was also deputy to
outgoing finance minister Youssef Botrous Ghali. "We want people to work and
not take charity from the government."

For measures already announced, the interim government will find funding by
re-allocating spending to more high-priority areas, rather than re-making
the Egyptian economy, she said.

"Instead of spending now on, say, for example, landscaping, we’ll re-channel
that money to more urgent needs," she explained.

Al-Hariri, a member of the left-of-centre Tagammu Party, agreed that the
current interim government is not taking a U-turn away from capitalist
policies inspired by Western financial institutions.

"Their measures are just like tranquilizers; something to kill the pain but
not cure anything," he said.

Al-Hariri added that past policies under Mubarak were not effective and that
any future government should find an alternative. He recommended long- term
plans to create more jobs, and what he called "real industries" and "real
investments".

Confiscating wealth looted by cronies of the former regime, more egalitarian
distribution of wealth, gradual taxation, better government oversight, and
placing "a reasonable ceiling" on profitability of goods and services sold
to the public are among the measures that should restore an economic balance
to society, he said.

Mamdouh Al-Wali, a business writer with the Al-Ahram Daily newspaper, said
Egypt’s path towards a new economic direction will be fraught with dangers
from deeply-rooted interests, such as businesses, former regime symbols, and
international financial institutions.

"A future new government, even though elected, may not be able to resist all
that counter-pressure," he told IPS. "The change will be hard."

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