x Abu Dhabi, UAESaturday 22 July 2017

New Egyptian finance minister Hazem Beblawi draws flak over past policies

The 74-year-old economics professor is associated with neoliberal programmes that many in Egypt blame for cementing the corrupt government presided over by former president Hosni Mubarak.

CAIRO // While many of the appointments to Prime Minister Essam Sharaf's new cabinet last week prompted little fanfare, one appointment that did draw immediate criticism was Hazem Beblawi, Egypt's new minister of finance.

A 74-year-old economics professor, Mr Beblawi is associated with neoliberal programmes that many in Egypt blame for cementing the corrupt government presided over by former president Hosni Mubarak.

Even before he was officially sworn in last Thursday, Mr Beblawi began making statements to the media about the shape his administration would take. The transitional cabinet is only expected to hold power until elections later this year, but economic policy has quickly turned into one of the best-articulated changes Egypt may make post-Mubarak.

One of the main issues has been the Supreme Council of the Armed Forces' (SCAF) choice to turn down an International Monetary Fund (IMF) loan negotiated by Mr Beblawi's predecessor, Samir Radwan. SCAF instead said the money needed to plug Egypt's current budget deficit would come in the form of grants and loans from Gulf States including Saudi Arabia, the UAE and Qatar.

Mr Beblawi said he would not reassess Mr Radwan's budget figures, which show a deficit of more than US$3 billion (Dh11bn) for the upcoming fiscal year. He did say he would consider taking money from the IMF, and announced the dissolution of the Ministry of Investment, which was dedicated to drawing foreign money into Egyptian companies, part of a Mubarak-era privatisation programme that is now under scrutiny. Some of the heads of state companies that underwent privatisation may face trial and have either fled the country or been barred from travel.

Reached by phone on Saturday, Mr Beblawi declined to be interviewed, and said that he would not be speaking to the media for "at least another week".

Hussein Shehata, an economist who knows Mr Beblawi, said: "He understands poverty and unemployment and the gap between wages and prices and financial corruption and the debt. Problems such as wages, unemployment, inflation and pensions need to be addressed immediately."

Foreign investment banks are likely to be wary of Egypt until at least after elections, or whenever the political situation becomes less fluid. In the meantime, many Egyptians are discussing what direction the new minister will take.

"All the American aid went to the rich people," Mr Shehata said. "We want an investment ministry that will work on small projects."

Adel Zakaria is a union organiser in Sadat City, one of the major locations of foreign investment in Egyptian manufacturing.

Workers, who began organising openly outside the auspices of the government toward the end of Mr Mubarak's rule, now hope 70-year-old laws barring independent organising will finally be struck down. They have also demanded immediate wage increases to keep up with inflation.

Mr Zakaria said: "The cabinet did pass a law allowing for independent labour unions. We are waiting for SCAF approval of the law, and this would be a historic achievement."

The IMF money has become a topic of discussion. Many Egyptians blame past IMF loans for driving speculation bubbles in banking and property and largely benefiting businesspeople with connections to Mr Mubarak's government. The IMF's offer of a "no-strings attached" loan for Egypt this year may have been less an act of generosity and more a sign of their lack of concern that Egypt would follow the parameters usually associated with IMF loans in any case.

"At the end of the day, these loans will be conditional, and the conditions will not benefit the labourer but the rich Egyptians. Any benefits to the economy are short term, later generations will have to deal with the problematic effects," Mr Zakaria said. "I think the support from the Gulf is legitimate, and it is a grant rather than a loan which is more dignified."

Abdel Hafez El Sawy, an economist who has worked with Mr Radwan, said SCAF was right to turn down the loans.

"If there was strong negotiator, I would have no problem in exploring loans from the [World Bank] or IMF. The economy is working, there are some obstacles to the sectors of tourism and real estate, which was already suffering before the revolution. Tourism is down, and will improve when a new government is place and things are more stable politically. I am optimistic about Egypt's economic future."

foreign.desk@thenational.ae