From: barnhart@gagme.chi.il.us (Mr Aaron Barnhart)
Subject: IPS: EGYPT: GRAPPLING WITH REALITIES OF
Originator: barnhart@gagme
Organization: Evanston, Illinois
Date: Mon, 31 Aug 1992 06:15:22 GMT

Area: Opecna Morning Transmission
Title: EGYPT: GRAPPLING WITH REALITIES OF REFORM TO FREE MARKET


an inter press service feature

by ruby ofori

cairo, aug 25 (ips) -- the last time egypt underwent stringent
economic reforms in 1984 there were massive riots.

angered by the sharp rise in food prices, looters tore up
shops and wreacked havoc in cairo's high class suburb of
heliopolis.

today heliopolis is buzzing with new shops including foreign
fast food retailers, pizza hut, kentucky fried chicken and
wimpy. ''but we need all these companies outside cairo'', said a
ministry of finance official who asked not to be named.

since the 1984 riots, multilateral finance institutions have
continued to insist that egypt get rid of inefficient state-run
companies and remove subsidies on essential commodities such as
bread and petrol.

like every where else in africa, the structural adjustment
advisers want goods, services and labour to reflect their real
market values.

but ''public ownership is rooted in the minds of those who
don't have'', says mahfouz al ansari, editor-in-chief of a
national newspaper 'al gomhouria'.

it has taken three years of halting negotiations for
president hosni mubarak to persuade western financiers that only
a gradual introduction of liberalisation would work in his
north-east african state.

negotations were broken off in 1987 when neither side would
compromise, say observers. by 1990 the world bank was convinced
by the gradualism argument and a new package of loans was
agreed.

in return for keeping this programme on track and as a reward
for supporting the u.s. in the 1990-91 gulf crisis, 50 percent
of egypt's 35 billion dollar public debt was written off by the
paris club.

the debt write-off was to be in three phases. after the first
discount of 20 percent, creditors expect results before letting
egypt off a further 15 percent followed by 15 percent again.

although egypt is the second highest recipient of u.s. aid,
receiving two billion dollars annually, it has not escaped
economic decline. (more/ips)


egypt: grappling (2)

like other developing countries, egypt's problems are
structural. out of its huge land mass only four percent is
arable land and the rest is desert.

over the years food production has declined, necessitating
imports while the budget deficit and the national debt have
grown annually. if part of egypt's debt was not cancelled, its
service obligation would this year equal 57.5 per cent of export
earnings, according to u.n. statistics.

major foreign exchange earners: oil, revenue from the suez
canal, and cotton, could not pay for the growing import bill,
which has gone up by 198 percent since independence in 1952.
tourism is the hope of the future as well as new farming
settlements on reclaimed desert land.

in the meantime, foreign exchange has been liberalised, new
exchange bureaux have mushroomed as a result and the black
market in foreign currency has vanished.

graduates are no longer guaranteed jobs in the civil service
and state enterprises are being prepared for sale to private
entrepreneurs.

rising prices and unemployment are the major complaints of
the average man and woman in the street. according to world bank
statistics, the rate of inflation is 14 percent. unofficially it
is put at 30 percent.

rising prices are blamed on liberalisation of interest rates
which have increased from 14 percent last year to 16 percent
this year.

egyptians say subsidies are being quietly removed, as the
government will not admit it is effectively raising the price of
bread. people notice the average loaf is getting smaller.

this time egyptians are adjusting to belt tightening by sheer
hard work and additional part-time jobs.

a side-effect of liberalisation is the rise of the slick city
entrepreneur -- the nouveau riches alongside the impoverishment
of sections of the rural and urban communities, says al ansari,
urging privatisation to be speeded up in order to get rid of
corrupt state firms.

''we are in a transitional period accompanied by corruption,
lack of efficiency and a large civil service. that means getting
rid of the bureaucracy and they are resisting'', he says.

''if your are able-bodied and educated structural adjustment
is not so bad, adds al ansari. ''the worst off are those with
fixed incomes and no opportunities for a second economic
activity''. (end/ips/ro/ar/tvh/92)



-- 
Mr. Aaron Barnhart@gagme.chi.il.us -- posting from Evanston, Illinois
Newsgroups: soc.culture.african