Towards economic breakthrough
Egypt, Economics, 3/26/2002

Head of the Economic and Financial Committee of the Shura Council, Ahmed Rashad Moussa stressed that the current liquidity squeeze can be attributed mainly to private companies that absorbed some L.E. 15 billions.

This liquidity squeeze is also due to rocketing costs of some public services, especially telecommunications that hit some L.E. 11 billions, not to mention the increasing costs of electricity and water consumption and cleansing and drainage charges, added Moussa, explaining that these elements cut short individual income and affected demand and investment.

He noted also that extensive lending for luxurious real-estates resulted in concerned companies facing sever financial crisis due to failure to honour their commitments since there were weak demand on such real estates as well as deviations in some banks.

On the other hand, Moussa continued, government expenditure is miles away from being rational with many streets paved several times in a very short time, besides financial exceedings of some governors as flagrant examples.

As for the drop of the Egyptian pound value, Moussa said that it is an expected outcome of the unbalanced market powers and uncalculated import, drug trafficking and money laundering. All these led to growing demand on US Dollar against fall of the Egyptian Pound.

This problem could be solved through narrowing the gap between US Dollar offer and demand or even injecting more SU Dollars than demanded, he added.

On his part, Samir Toubar believes that there must be an emergency plan for dealing with this crisis. He stresses that Egyptian economy must be adjusted with a view to realizing stability and paving the way for the planned 15-year development program.

This emergency plan includes raising salaries and low incomes of state and public sector employees who account for some 5.5 millions, responsible for their family members of about 15-20 million persons, especially that they constitute the social strata that favors national products.

Raising the salaries and incomes of this category would result in absorbing stockpiled products and creating more job opportunities, he added.

This emergency plan has to be concomitant with a medium-term plan aiming at drawing financial policies related to state's general budget in terms of the deficit acceptable in the current circumstances, said Dr. Toubar.

He added that the solution needs also monetary policies for increasing available cash, trade policy foe boosting exports and curbing imports and economic legislation for adjusting the market and protecting dealers.

A long-term vision should be shaped with a view to promoting strengths of the Egyptian economy towards a remarkable breakthrough and more competitiveness, including modernizing industry, improving performance, developing education, upgrading health care, nutrition and preserving environment, Toubar elaborated.

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