x Abu Dhabi, UAETuesday 25 July 2017

Egyptians face choice between two economies

Whether Egypt's economy leans towards the private sector to stimulate the economy or reverts to a more nationalist agenda are two of the possible outcomes from the presidential election that is expected to end today.

The economic platforms of the front-running candidates - including Amr Moussa, a former foreign minister who spent the last decade in the Arab League - in Egypt's election opposing paths. Amr Nabil / AP Photo
The economic platforms of the front-running candidates - including Amr Moussa, a former foreign minister who spent the last decade in the Arab League - in Egypt's election opposing paths. Amr Nabil / AP Photo

CAIRO // Egypt's leaning towards the private sector to stimulate the economy or reverting to a more nationalist agenda are two of the possible outcomes from the presidential election that is expected to end today.

The race appears to have come down to a few leading contenders. The economic platforms of the front-running candidates - including Amr Moussa, a former foreign minister who spent the last decade in the Arab League, and Abdel Moneim Aboul Fotouh, once a leader of the powerful Muslim Brotherhood - offer the Arab world's most populous country two opposing paths.

Ashraf Swelam, an economic adviser to Mr Moussa, said the former minister's economic agenda focused on decentralising government and spreading the power of the state across Egypt.

This includes reviewing past privatisation deals, shifting emphasis to the private sector and moving money-losing state-owned institutions under a mega state-owned holding company with a chief executive. Such a programme would signal a move to a more profit-driven, capitalist model.

Mr Moussa, who has positioned himself as the experienced choice, has also flagged up the importance of mobilising Arab funds, suggesting that his decades of diplomatic experience would make him well placed to do this.

Dr Aboul Fotouh, whose campaign has attracted the support of not only young Islamists but a growing number of liberals, has homed in on an Islamic-based socialist economy that prioritises the most needy through social programmes in housing, health and education and by introducing legislation to encourage Islamic banking and finance.

A point of contention for both candidates is the US$3.2 billion (Dh11.7bn) loan from the IMF that the interim government said could be signed within weeks of the election.

Samer Atallah, an economic adviser to Dr Aboul Fotouh, said there was scepticism over accepting foreign loans, criticising the reliance on foreign borrowing as "the biggest flaw" of Mr Moussa's campaign.

Mr Atallah, who is an economics professor at the American University in Cairo, said this would be "the ultimate demise of Egyptian economy".

But Mr Swelam said Mr Moussa's campaign was not "built around money being taken from abroad" but through reforms and restructuring budget allocation.

The other main contenders, including Mohammed Morsi of the Muslim Brotherhood, Ahmed Shafiq, the last serving prime minister under Hosni Mubarak, who was toppled from the presidency last year, and Hamdeen Sabbahi, a leftist with socialist policies that are a throwback to the era of president Gamal Abdel Nasser, have optimistic long-term forecasts for cutting the budget deficit, but a lack of specific short-term measures.

Analysts say the new president is unlikely to adopt a Nasserite style of leadership with a grand vision of restructuring the economy.

Instead "the new president may well follow the same path of delegating a lot of economic policy while focusing on the political transition and Egypt's international relations", said Jane Kinninmont, a senior research fellow at Chatham House, a London think tank.

Both Mr Moussa and Dr Aboul Fotouh target a 50 per cent cut in the budget deficit within a few years, by reducing energy subsidies but simultaneously increasing expenditure on health, education, infrastructure investment and higher wages.

There are also arguments to increase public spending as opposed to imposing austerity, including deterring corruption by increasing wages, another issue addressed across the political spectrum.

The abilities of whoever is elected will be tested immediately - with a new constitution a top priority.

business@thenational.ae

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