Cairo – Egypt could soon be looking for a new economic model – one that will be different from the traditional system that has been promoted for years by international financial institutions such as the World Bank, the IMF, and the U.S. Agency for International Development (USAID), under the reign of ousted president Hosni Mubarak.
“Lots of Egyptians after the revolution realized the level of injustice against them, and that they were being ripped off for many years,” Abulezz Al-Hariri, a former opposition member of parliament, told IPS.
“They started asking for their rights,” he added. “This cabinet is just trying to cater to that immediate realization.”
Since the mid 1980’s, the World Bank, the IMF, and USAID have sought to encourage policies that limit the role of government in the economy, cut budget deficits, and give more influence to the private sector and corporations.
Under pressure from the public following the success of the January revolution, the government of Prime Minister Ahmed Shafiq – originally appointed by Mubarak but kept by the military to run the everyday affairs until new elections are held – quickly rolled back some of the controversial policies.
Many of the moves announced over the past few days are designed to be a quick fix to the economic situation faced by millions of Egyptians who are eager to enjoy concrete benefits of the 18-day revolution in which 365 protesters died.
The new government has announced that all citizens are eligible to apply for monthly portions of sugar, cooking oil, and rice. The previous cabinet, which was comprised of businessmen and former corporate executives, had frozen the rations.
This decision overturned the previous policy of providing monthly rations only to those who prove they are poor through a lengthy process of paperwork and red tape.
Last week, new finance minister Samir Radwan said that the country will not change its current subsidies system, which offers reduced food prices for some 65 million Egyptians.
Furthermore, the new government promised to offset any extra cost in food prices that might accompany rising prices internationally. Radwan put the initial cost at 2.8 billion Egyptian pounds (about 425 million dollars).
Under the new policies, the health ministry will offer free health care 24 hours a day at public hospitals. Days before the Jan. 25 revolution, the Mubarak regime had limited free health care hours from 8:00 am to 1:00 pm.
Temporary workers who have spent at least three years working for the government will now be given permanent contracts that carry higher salaries, and benefits such as pension plans, and health and social insurance.
Many municipalities also saw long lines of applicants after the interim government said that it will offer subsidized housing for young people on an expedited basis.
And on Wednesday, the Central Bank of Egypt said it will be a “guarantor” to achieve the demands of banking sector employees, which include curbing top management compensation packages and salaries as well as offering greater benefits for employees.
But while the new measures remain limited, their implementation has raised questions about whether Egypt may be heading back to its strong socialist past, which flourished under the rule of former president Gamal Abdelnasser, who ran the country in 1950’s and 1960’s.
Some officials say that the new programmes constitute an initial reaction from a team known for its pro-capitalist background and are only temporary.
“We are not moving back to a socialist past,” Amina Ghanem, deputy finance minister, told IPS. “We are just trying to extinguish fires.”
“We are not going to lose our reforms,” said Ghanem, who was also deputy to outgoing finance minister Youssef Botrous Ghali. “We want people to work and not take charity from the government.”
For measures already announced, the interim government will find funding by re-allocating spending to more high-priority areas, rather than re-making the Egyptian economy, she said.
“Instead of spending now on, say, for example, landscaping, we’ll re-channel that money to more urgent needs,” she explained.
Al-Hariri, a member of the left-of-centre Tagammu Party, agreed that the current interim government is not taking a U-turn away from capitalist policies inspired by Western financial institutions.
“Their measures are just like tranquilizers; something to kill the pain but not cure anything,” he said.
Al-Hariri added that past policies under Mubarak were not effective and that any future government should find an alternative. He recommended long- term plans to create more jobs, and what he called “real industries” and “real investments”.
Confiscating wealth looted by cronies of the former regime, more egalitarian distribution of wealth, gradual taxation, better government oversight, and placing “a reasonable ceiling” on profitability of goods and services sold to the public are among the measures that should restore an economic balance to society, he said.
Mamdouh Al-Wali, a business writer with the Al-Ahram Daily newspaper, said Egypt’s path towards a new economic direction will be fraught with dangers from deeply-rooted interests, such as businesses, former regime symbols, and international financial institutions.
“A future new government, even though elected, may not be able to resist all that counter-pressure,” he told IPS. “The change will be hard.”