By Doaa Farid
The current interim government is taking the first step of a long term developmental vision, referred to as “Egypt 2022”, aimed at achieving a “sustainable and containment growth”, according to a document from Ministry of Planning.
“This long term plan focuses on building a strong and disciplined economy based on social justice, characterised by diversity and openness to the outside world, and enhancing work and competitiveness values, with a socially responsible private sector playing a major role,” read the document.
The document noted that achieving this plan requires addressing three major issues: water, energy and land usage. It also cited dealing with the overpopulation with a clear methodology and identified timeframe as a priority.
“The overpopulation issue can be converted from a ‘problem’ to a ‘path of development’ through boosting investments in human capital, especially in the fields of education, training and healthcare,” the document added.
According to the document, the government’s long term vision seeks to achieve social stability and improve living standards so that “society can use human power to achieve economic stability.”
The vision will also seek to attain sustainable human development by upgrading the fundamental and higher education systems as well as the scientific research and health system.
“The existence of a financial sector able to provide the needed funds for financing different projects is crucial,” it added.
This long term vision included technological development to aid in improving the quality of citizens’ and institutions’ services “which by result will attract local and foreign investments and create job opportunities.”
The vision also focuses on developing basic infrastructure – especially in governorates in Upper Egypt, New Valley, Sinai and the Suez Canal – in a way that serves the sectors of industry, agriculture, trade and transportation. It also stressed the importance of developing the administrative half of the state’s institutions.
The government’s long term plan is aimed at creating a suitable environment for local and foreign investments which can help in boosting the competitiveness of the economy, according to the document. It also plans to meet the growing needs of energy from traditional sources.
“The government is studying an inclusive plan for national projects such as the Suez Canal axis and developing Egyptian railways,” the document said.
Meanwhile, the report from Ministry of Planning sheds light on the current challenges facing the economy. Despite the relative stability in income per capita over the past three years, the poor investment rate and slump in the savings rate represent major challenges to the economy. According to the report, foreign direct investment (FDI) in the past years averaged to $2bn comparing to $13bn in 2007.
Rising unemployment levels – now at 13% compared to below 9% five years ago – represent another obstacle to the government, the report said, while those living below the poverty line reached 25% in 2010/2011.
According to the document, medium-term steps would be necessary before implementing the long term plan. This stage, which will last from July 2014 until June 2017, will aim to implement the programmes and policies geared at bringing about the economic stability needed for the long-term plan’s success.
The medium-term stage is targeted at increase the growth rate to between 5% and 7%, boosting the private sector, increasing investments and developing the government’s information technology infrastructure. In addition, it focuses on qualifying the workforce and developing Egypt’s internal trade system to curb high prices.
The interim cabinet adopted an economic stimulus plan in August, which will aim to create a 3% growth rate over the current fiscal year. It is also aiming to ameliorate the 13.8% of GDP budget deficit to 9.1%. This plan involves additional investment projects worth about EGP 30bn, according to Minister of Planning, Ashraf El-Arabi.
The projects included in the plan involve strengthening electricity grids, the completion of 17 road projects to link all the governorates, finishing the construction of 50,000 residential units, reclaiming 32,600 agriculture acres in addition to purchasing 600 buses for public transportation to work with natural gas. This will decrease energy subsidies granted by the government, along with other projects.
The government has however failed to detail its sources of financing for the plan, prompting many analysts to question its viability.