10 axes of the Egyptian Government’s World Economic Conference

Translated by Farah El Desouky

The Egyptian government under the chairmanship of Dr. Mostafa Madbouly held a press conference on 15 May 2022, which some sources described as universal. because of the magnitude of the media coverage of this conference from various local and international media, To announce the Egyptian plan to confront the consequences of the Ukrainian crisis on the Egyptian economy The conference was commissioned by President Abdel Fattah el-Sisi a few weeks ago. economic crisis “, by preparing a world conference to announce its actions in the face of the fallout of economic crises.

In this spirit, this analytical paper provides a review and evaluation of Egypt’s economic plan to counter the repercussions of the Russian-Ukrainian war on the Egyptian economy.

Egypt’s assessment of the state of the international economy:

During this conference, it was explained that Egypt’s assessment of the current state of the international economy revolves around realistic fears of some indicators of global inflation, declining growth rates and high debt levels for developing and poor countries. According to preliminary assessments, the global economy will suffer an estimated $1 trillion in losses, as global GDP contracted by about 1% by the end of 2022, with global inflation increasing by about 3% during the same year, with the global debt level projected to rise to $ 303 trillion, and 60% of the world’s poorest countries in critical condition.

We note that since the Ukrainian crisis last February, the Egyptian Government has taken a series of proactive measures to minimize the impact of that crisis on the Egyptian economy. and import difficulties with crisis countries, especially Russia and Ukraine Egypt have placed 130 billion pounds to reduce the direct impact of the Russian-Ukrainian crisis during the current period as a result of increased commodity prices. and Pound335 billion to address the medium- and long-term spillover effects.

Features and axes of the Egyptian plan:

Through the Prime Minister’s statements and the various themes reviewed, he explained that the Egyptian plan to confront the current situation of the Egyptian economy and to minimize the effects of the Ukrainian crisis on it will revolve around the following axes:

(I) – Supporting the role of the private sector: “State ownership policy document” issued as a national strategy aimed at broadening the base of private sector participation, which is a major step in increasing opportunities for private sector participation in the economy and an attractive component of foreign investment, and also contributes to strengthening the confidence of international institutions as an integrated plan aimed at empowering the private sector, to complement the Egyptian State’s government reforms to increase private sector participation to 65% of total investments. It is also intended to identify $9 billion in assets to be released to the private sector this year out of the 10 billion announced earlier.

(ii) Management of State assets: The Egyptian Government intends to launch a sub-fund under Egypt’s sovereign fund in partnership with the Financial Supervisory Authority and international legal companies international sovereign funds “, and $15 billion in assets have been identified for next year’s 2023 rollout in the new and renewable energy sectors – education, health and communications.

By the end of the year 2022, a total of 9 billion pounds worth of assets has been released between real estate, financial services, information technology, industry and agriculture, in implementation of presidential directives to accelerate the maximization of the return of various development projects in the areas of infrastructure and optimal utilization of assets.

(III) – Monetary Policy Management: The Central Bank of Egypt has previously announced a 1% rate hike (100 basis points), at an extraordinary meeting last March, in an effort to absorb the wave of inflation, and to attract foreign dollar investments for government debt instruments, after some foreign loyalist presidents exited Egypt, following the Russian-Ukrainian crisis, as the exchange rate of the Egyptian pound fell by about 17% in the last week of March. In the same vein, one-year savings certificates were issued with an annual return of 18% disbursed monthly by Banque Misr and the National Bank of Egypt.

(iv) Support to productive sectors: 16 pounds have been set as the value of the customs dollar for commodities and production supplies until the end of April 2022, with exemption for companies that may be stuck supplying their tasks to government projects on agreed supply dates; Of the fines for the delay of one month, the state treasury also bears about 4 billion pounds, This is the value of the real estate tax due for industry sectors for 3 years and 25% increase in the credit categories for all agricultural crops to support and assist smallholder farmers to afford agriculture in the face of any increase in production and operational input prices.

(V) – Support for green development projects: i.e., projects that do not cause environmental and climate pollution, through the issuance of the “golden license” to them. The term “golden license” dates back to the meeting of the Council of Ministers on 23 December 2021, where the Head of Government confirmed that it will once be granted to some development projects covering 3 areas: green hydrogen, electric car and infrastructure industry, seawater desalination and renewable energy projects, so that the project obtains the golden license from the government without the need to take any further action.

(VI) – Activation of the Exchange: The Egyptian Government is currently merging the largest 7 ports under the umbrella of one entity in preparation for their launch on the money market, in the coming period, in addition to merging 7 hotels of the business sector to also put them on the stock exchange, with the main offering to Egyptians with a percentage to foreign investors. 12 government companies were also listed on the Egyptian Stock Exchange before the end of the 2022, including two companies belonging to the National Enterprise Authority of the Armed Forces and 10 companies belonging to the public business sector. The Government had also developed a plan to revitalize the financial market, including 21 actions aimed at attracting new liquidity for the exchange. as well as exempting debt instruments investment funds, exchange-bound equity investment funds, risk capital funds and companies from tax, as well as establishing a transparent tax entity to invest individuals in the Egyptian stock exchange through specialists, creating a good investment environment to support the Egyptian economy.

(vii) – Encouraging startups: President Abdel Fattah el-Sisi directed the establishment of companies by digital notification through a platform established for this purpose. This is within the framework of removing all impediments to startups and entrepreneurs; To allow virtual companies to open without adhering to the need for their physical location, with a view to saving expenses and facilitating them.

(viii) Tax transactions: by establishing a mechanism that allows tax deductions on distributions within composite tax structures, to encourage investments in Egypt, provided that they are not used to avoid tax, as well as to modify the tax treatment of investment funds, to encourage institutional investment, which supports the economy and start-ups, with controls to ensure proper implementation. and activate white lists to import electronic components of specialized companies. The government also announced that a new law would be introduced to exempt industrial projects in new and border cities from certain tax burdens.

(IX) – Social Protection Package: The Egyptian Government announced that 7.2 billion pounds will be created to bring together 450 thousand new families for beneficiaries of “solidarity and dignity” Also, 190 billion pounds was allocated to the National Social Insurance Authority to disburse the 13% increase in pensions beginning on April 1, 2022, along with an increase in the tax exemption limit from 24 to 30 thousand pounds, by 25% to alleviate citizens. Financial measures and social protection also include the application of salary increases on 1st April 2022 instead of 1st July 2022, In addition, 36 billion pounds will be allocated for payment of the periodic allowance for civil servants, the special allowance for non-addressees and the additional incentive, along with the approval of an increase of 8% of the job wage to a minimum of 100 pounds per month, and the periodic allowance for civil servants after increasing it from 7% special allowance for non-civil servants “, as well as 15% of basic pay.

(X) – Securing wheat supply: The Egyptian State works on multiple axes to raise the proportion of enough wheat, through two main axes: the horizontal expansion axis, namely the establishment of national projects aimed at increasing the agricultural area to overcome the phenomenon of encroachment on agricultural land and urban sprawl, as well as major projects in the development of North Central Sinai, the new delta and Tushki. The second is vertical expansion, Egypt is considered one of the highest in the productivity of wheat acre unit, Acre productivity currently averages about 2.8 tons, or 19-20 wheat shells. Thus, this is a remarkable effort for the Egyptian state in this area. Egypt has also succeeded in producing 10 million tons of wheat in the current year, up 1 million tons from 2021. The following phases of the strategic silo project have also been completed to increase the absorptive and storage volume of the project, increasing the silo’s storage capacity to 5.5 million tons compared to 4.1 million tons in 2015. An additional supply incentive for the price of local wheat butterflies for the current agricultural season to encourage farmers to supply as much as possible in addition to diversifying the sources of supply of basic food commodities, seeking to increase its inventory for a future period of at least 6 months and also coordination among all stakeholders to provide food goods at low prices as well as strengthening market control efforts and tightening control over outlets.

Based on the above, the comprehensiveness of Egypt’s plan to counter the repercussions of the Russian-Ukrainian war on the Egyptian economy is evident. The Egyptian Government has endeavored to diversify the tools for dealing with the crisis in order not to lead to economic stagnation and inactivity in the productive sectors. The Egyptian Government has also announced that national projects under implementation will not be postponed or halted, but that new projects will be prioritized, especially those related to the import of external components. It is worth mentioning that without the economic reform program in its two phases since 2016 to date, Egypt would not have been able to endure from the first coronavirus crisis until the Russian war, and stand in the face of these crises, especially given that national projects implemented by private sector companies and the state opened the prospects for growth. These themes, which were covered in the Egyptian plan, included the State’s steps to strengthen private sector activity and work to further localize Egyptian industries to further secure needs and reduce the degree of association with the outside world.