Amr Moussa, the front-runner in Egypt’s presidential race, is pledging to boost public spending in his first year in office to lower the highest unemployment rate in at least two decades.
Moussa, a former foreign minister and secretary-general of the Arab League, would mobilize funds from Arab countries and international lenders to spend on infrastructure, according to his manifesto published earlier this month. He also pledges to restore security to encourage foreign investment, lowering yields that have surged about 50 percent since last year’s uprising.
“We will need to pump money into the economy to create jobs,” Ashraf Sweilam, Moussa’s economic adviser, said. “We will not increase the budget deficit a lot, especially if we restore security. This will improve sentiment and help us achieve a growth rate that counterbalances” the increased spending, he said.
Campaigning for Egypt’s first presidential election since the ouster of Hosni Mubarak began yesterday, with polling stations opening on May 23 and the winning candidate due to take office by the end of June. The country’s next ruler will inherit an economy saddled with the lowest growth rate and highest budget deficit among countries with traded external debt in the Middle East, International Monetary Fund data show.
Moussa, who led the field of 13 candidates in an opinion poll published yesterday by the Al Ahram Center for Political and Strategic Studies, expects public investments to widen the budget deficit “slightly” in the first year, said Sweilam. Cuts in energy subsidies and higher economic growth will help bring the deficit down to about 4 percent of economic output by 2017, he said. The shortfall was about 10 percent of gross domestic product last year.
Almost one million people lost their jobs after the uprising that ended Mubarak’s rule, as tourists shunned the country and clashes between security forces and pro-democracy protesters prompted private businesses to curtail investment. The unemployment rate climbed to 12.4 percent, the highest since at least 1992, according to official figures, while gross domestic product shrank for the first time in decades.
Moussa has vowed to “immediately employ” his regional and international contacts to plug a financing gap he estimates is as much as $12 billion and which may increase, according to his manifesto. While critics decry his links to the former regime, Moussa’s connections could help him to attract funds from abroad, said Alia Mamdouh an economist at investment bank CI Capital in Cairo.
Moussa’s economic policies won an endorsement from former Finance Minister Samir Radwan, who solicited the IMF loan last year as he tried to boost public investments to resuscitate the economy. Radwan was replaced in a cabinet reshuffle in July.
“There is high unemployment and the private sector is suffering, so public policy should step in,” Radwan said on April 19. “What I like about the program is the speedy response to people’s problems in the first stage. In the second stage, it lays the foundation for long-term growth,” Bloomberg reported.