At a recent interview, published in Al-Musawar weekly, Egyptian Prime Minster Atif Ubaid reiterated his stance that the national economy was on the right track. He stated that to increase employment, the government must conduct a comprehensive study of local needs throughout the nation. Presently, jobs are being offered within the government, and financial incentives are being given to businesses owners who provide job opportunities.
Ubaid added that promoting small businesses would surely increase job opportunities. In general, such enterprises employ some 90 percent of a nation’s workforce, according to Ubaid, in comparison to ten percent employed by larger corporations. Therefore, the state must concentrate on boosting small enterprises if it wants to create jobs. He stated, however, that the real solution to the employment problem lies in boosting economic growth, which is dependent upon an investment increase.
A respectable six percent growth rate, he estimated, would require investment to the value of three billion dollars. Others, though, have maintained that as much as five billion dollars would be necessary to achieve the state’s goal of a seven percent yearly growth rate.
Part of the problem with attracting investments is the nation’s exchange and interest rates. However, these issues are only peripheral, while the real key to attracting capital lies in ensuring stability and security for investments. This must be regulated by government policies, he said.
In addition, the ability to transfer funds easily is also a crucial factor. For now, customs charges continue to exist, although they are being reduced every year in accordance to an agreement with the European community. The elimination of such fees is considered an important part of facilitating an inflow of investments to the nation.
Furthermore, to offset losses from shrinking customs charges, which the government relies upon for a major portion of its income, Egypt has turned to a value added tax. All customs taxes are expected to be terminated within a decade or so.
Ubaid also stressed the importance of maintaining strong foreign reserves. He upheld the government’s decision to transfer $1.5 billion, acquired from the recent sale of Egyptian dollar bonds, to national reserves rather than to development projects.
He claimed that the national economy would benefit more in the long run if Egypt were capable of securing international loans than if it invested in short-term employment projects. Foreign currency reserves currently stand at $14 billion, down from $20 billion only a short time ago. Furthermore, he added, banks must also take responsibility for providing foreign currency to the nation.
In a final note of promise for the Egyptian economy, Ubaid recalled the recent report disclosed by the International Monetary Fund saying that Egypt’s national economy is most definitely on the upswing. It is, in fact, doing better than it had a decade ago. Inflation is dropping, growth rates stand at approximately 4.5 percent, and foreign currency reserves remain high, the reports stated. — (MENA Report)
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