By Doaa Farid
The government is aiming to cut red tape and jumpstart stalled investments to rebound business activity, Deputy Prime Minister Ziad Bahaa El-Din said in an interview with Reuters on Sunday.
The new cabinet is planning “quick steps” to help rebound the economy while laying the groundwork for a broader “Marshall Plan” to present to Gulf countries and other donors.
“Ultimately, there isn’t another sustainable source of closing the deficit except to get the economy running, to get growth going, to get people to work, to get incomes paid, to get taxes paid as well,” Bahaa El-Din told Reuters, stressing the importance of speed in getting the economy back on track.
Bahaa El-Din noted however that the cabinet expects to be in power for less than seven months, and lacks a popular mandate to take major measures to rein in the rising budget deficit, which since January has been running at around $3.2bn a month, equivalent to almost half of state spending, according to Reuters.
The interim government is facing an inherited budget deficit which in June had been estimated at EGP 197.5bn, exceeding previous forecasts despite calls for austerity. However, Finance Minister Ahmed Galal said last week that the government would try to avoid major austerity measures.
Bahaa El-Din said the government is looking to speed up investments already in place rather than seek new projects at a time when investors might still be wary of the country.
Instead, the government will focus on modifying regulations, the investment environment as a whole, and encouraging financial institutions to again take on risks and lend, he said.
“One priority of the minister of industry, for example, is to look at why some of the already existing factories are working below capacity or have been closed or are not fully functional,” Bahaa El-Din said.
The significant goodwill from the Gulf and other foreign bodies has led Bahaa El-Din him to dub the anticipated influx of funding the “Egypt Marshall Plan”, in reference to the massive American aid effort to Europe following the Second World War.
“The $12bn in Gulf aid could include upgrading the country’s entire physical infrastructure, logistics infrastructure, tourism infrastructure, transport, bridges, roads, storage capacity and power plants,” Bahaa El-Din said. “It may be that we can have the blueprint of a plan and an Egypt conference put in place.”