Repeated Changes Of Egypt’s Finance Minister Lead To Inconsistency, Uncertainty

Changing the finance minister twice in five months may add to the complexity of the economic conditions in Egypt, which has been plagued by continuous instability since the 2011 upheaval, observers say.

Fayad Abdel-Monem, a 58-year-old professor at Faculty of Commerce of al-Azhar University, was named the new finance minister on Tuesday, replacing El-Morsi Hegazi, who came as well in a reshuffle in January.

The change in the post is the fifth since the 2011 unrest that toppled former President Hosni Mubarak.

MAKING MATTERS WORSE

Economic expert Yousef Ebrahim, head of the Saleh Kamel economic center with al-Azhar University, said the repeated changes of finance minister are “widening the economic dilemma rather than solving it.”

“Every time a new finance minister (is) appointed, he puts a new vision, but he doesn’t have enough time to prove feasibility, which really complicates the economic scene in the state,” Ebrahim said.

Ebrahim traced the frequent rehash back to the “state’s financing problem.”

“Egypt’s economic problem lies in searching for more financing sources which is the main way to economic reform, so the change of economic plan came in the hope of getting new thoughts about more financing fountains,” he said.

“The finance minister in Egypt now is demanded to save the necessary alternatives to bridge the budget deficit through ways like rationalizing spending, increasing incomes or by depending on loans,” Ebrahim said.

The country’s currency has weakened by more than 10 percent against the U.S. dollar in two years, and its foreign reserves declined recently to 14.4 billion U.S. dollars from 36 billion dollars before the upheaval.

INCONSISTENT POLICIES

Ex-minister Hegazi said two days before the reshuffle that ” Egypt hopes to lower its budget deficit to 5.5 percent in the 2016/ 2017 fiscal year from 10.7 percent in 2012/2013.”

According to Ebrahim, any new minister is forced to stick to the budget plan put forward by the former one even if the plan does not match his own thoughts, which may perplex the economic situation as a result.

“The most fatal problem with the consecutive changes of finance minister is that every new minister finds himself forced to apply a budget plan put by a previous one … The new minister is compelled to apply the budget plan put (forth) by the former one Hegazi, who himself executed a budget plan of the military council during its ruling era after the upheaval,” said Ebrahim.

For banking expert Bassant Fahmy, the budget being discussed with the Shura Council (upper house) should be changed by the new minister because it is “illogic.”

“The budget being discussed now expects a money flow from investments, but such investments can’t come amid such political instability, so it needs to be changed,” said Fahmy.

IMF LOAN TALKS MORE AT RISK

The newly announced cabinet reshuffle came as Egypt is stuck in talks with the International Monetary Fund (IMF) about a rescue loan of 4.8 billion dollars. Some experts believe that the frequent cabinet reshuffles may send negative message to IMF officials.

Fahmy said the cabinet reshuffles in general and the finance minister changes in specific will be “obstacles” for the reaching of an agreement with the IMF.

“Firstly, talks … will be negatively affected … because it won’t lead to a political coalition that is necessary for getting the IMF loan, as none of the new ministers are from the opposition, ” said Fahmy.

“Secondly, multiple changes of finance minister give the impression of instability of economic policies which may lead to IMF officials’ reluctance,” she said.

“Some IMF officials told me that each time they become used to a minister, he disappears,” said the first post-upheaval Finance Minister Samir Radwan, who was quoted as saying by the official al- Ahram online.

Moreover, Fahmy said that the new minister, Monem, may not have a great deal of experience with the IMF according to his biography that refers to a career entirely involved with Islamic finance.

However, government spokesman Alaa El-Hadidy said Tuesday that changing the finance minister “won’t have any affect on the IMF talks.”

Supporting the reshuffle, deputy head of the Muslim Brotherhood, Essam al-Erian said “the reshuffle aimed at confronting the economic crisis and concluding the agreement with the IMF with a new vision.”

Xinhuanet