- - Wednesday, September 24, 2014

ANALYSIS/OPINION:

When millions of Egyptians took to the streets last summer and in 2011 to demand change, they were seeking effective and accountable governance and a fresh economic direction for the country.

However, the troubles we endured as we collectively struggled to reach a new political settlement exacerbated the country’s underlying problems, causing our budget deficit to balloon to an unsustainable level, our national debt to soar, our unemployment rate to rise and our already stretched infrastructure and services to deteriorate. A course correction was hard, but absolutely necessary. Today, we are doing just that, charting a new path toward high inclusive growth and fiscal discipline in order to meet the legitimate demands of the Egyptian people for a better and more dignified life.

We are increasing economic efficiency while simultaneously focusing on social justice. We slashed wasteful and highly regressive energy subsidies by 2 percent of GDP within one month into my tenure in office — a bold step that few thought we would take. This reform, to be followed by the total elimination of subsidies over the next five years, has sent a clear signal that Egypt is finally serious about addressing a long-standing structural problem. Aside from its fiscal objectives, this reform will result in better capital allocations — including more investment in labor-intensive sectors that will create the jobs our people need.

We introduced a number of important reforms in our income and property taxes, aiming to broaden our tax umbrella, increase tax buoyancy and close loopholes. We will be also introducing a new VAT regime that will make our tax regime less cumbersome, more equitable and better aligned to international best practices.

To ensure inclusivity and build a stronger social safety net, our government is redeploying some of the fiscal savings to fund health and education programs, housing for poor and lower-income households, the upgrading of slum areas, cash transfers to support vulnerable families and basic infrastructure. We are also reforming the food-subsidy system to reduce leakages, to make sure it is targeted to those who most need it, and to ensure food security. These measures will directly benefit Egyptian citizens and help us to substantially bring down our unacceptably high poverty rate.

The Suez Canal Regional Development Project is a prime example of the new opportunities in Egypt. We are digging a new channel alongside the existing one to multiply future revenue, as well as providing many new jobs and reduce the waiting times of ships in the waterway. This vastly increased canal capacity, accompanied by the construction of four new seaports, a new industrial zone and a technology valley in the canal region, will spur investment across the country. Blueprints for other major national projects are being drawn, including a “Golden Triangle” development project in upper Egypt that will capitalize on the natural resources and mineral wealth in the region between Qena, Quseir and Safaga, while also developing the area for tourism-related, industrial, commercial and agricultural opportunities. In addition, the reclamation of a little more than 4 million acres from the desert, ports, river freight, water desalination and other projects will offer significant investment opportunities.

We are determined to improve our business climate. We are diligently addressing regulatory and bureaucratic impediments. We have amended the antitrust law and introduced a contract-protection law, and will soon be implementing a new uniform investment law in order to create a level playing field, where transparency and the rule of law prevail and to facilitate investment procedures. This is an ongoing process with much still to do.

Egypt’s potential is great, and the country is poised to move into a new phase of economic renewal and growth that will act as a pillar of stability in our region. Our fundamental goal is to sustain high and inclusive growth based on sound macroeconomic principles so that we can bring about prosperity for our people, and guarantee a promising future for our children.

I am confident that our resolve, solid policies, persistent structural reform, the full and welcomed participation of investors, and most importantly the will of the Egyptian people and their determination to realize their aspirations and well-deserved ambitions will bring about success and prosperity. Egypt’s renewal will both endure and flourish.

Abdel Fattah El-Sisi is president of Egypt. He will speak at the United Nations on Thursday.

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