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Scratching the surface of the financial crisis - Daily News Egypt

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Scratching the surface of the financial crisis

For several weeks now, state-run media has been depicting a somewhat rosy outlook on the economy. Government officials are downplaying the gravity of issues; prominent figures such as Hassan Malek spew comforting statements,citing the pending influx of foreign investment and loans from international financial lenders and governments. The IMF loan , which would shore-up the …


For several weeks now, state-run media has been depicting a somewhat rosy outlook on the economy. Government officials are downplaying the gravity of issues; prominent figures such as Hassan Malek spew comforting statements,citing the pending influx of foreign investment and loans from international financial lenders and governments. The IMF loan , which would shore-up the gaping deficit of the state budget and certify Egypt internationally as a safe borrower, as a short-term measure is indeed a necessity.

However, everyone keeps ignoring the main issues, pretending that the issue will simply vanish; we’re in a race against the clock with an impending fully-fledged economic recession and the fact is, we’re moving way too slow to catch up with the curve, let alone get ahead of it.

Our illustrious Minister of Investment, Osama Saleh, appeared on a talk show last week stating with absolute confidence that the subsidies issue “will be resolved within days.” The newly christened minister of petroleum also came on TV, discussing the lop-sided distribution of subsidies, stating “80 per cent of those who deserve energy subsides receive only 20 per cent of it.” Why are either of those ministers discussing an issue that has absolutely nothing to do with the administration of their ministries?

The hefty EGP 114 billion subsidy bill is under neither of their jurisdictions. The Ministry of Petroleum operates as a private entity; its production is sold to the state at international prices and the state budget bears the brunt of that gigantic bill. Why isn’t the minister of petroleum discussing the reformation of his overtly corrupt sector? Why are the three major companies that constitute the engine of the Petroleum Ministry (the Egyptian Petroleum General Corporation, the Egyptian Natural Gas Holding Company, and Ganoub El-Wadi Petroleum Holding Company) operating in the shadows? How come we’re never privy to their quarterly statements? If the Central Bank of Egypt can publish reports of its quarterly performance, why can’t the Ministry of Petroleum do the same?

What is the minister doing on TV, talking about subsidies and state budget matters when he is clueless as to the budgetary issues of the ministry he is currently heading? Has the minister discovered the Rosetta stone to deciphering the financial labyrinth of the sector he is administering? has he figured out a way to resolve any of the debt obligations, hedged loans, disgruntled workers, inefficient and over-regulated agreements model, prevalent corrupt dealings spreading from the smallest data-entry employee to the top brass who ink agreements with big oil corporations, and all the other detrimental practices, which began with the tenure of the now-incarcerated former petroleum minister Sameh Fahmy and the New Guard cabinet of Ahmed Nazif and Gamal Mubarak’s buddies? Does the current minister possess a vision for how to reform this sector? If he does, why isn’t he talking about that on T V?

In the absence of a genuine reform roadmap for our energy resources and the entities entrusted to govern them, how can we be excited about foreign investment? We keep hearing of these huge investment projects; we hear of China’s prospective 160 factories to be erected north of Suez city, the development of the Suez Canal Corridor and an industrial zone east of Port-Said, and a myriad of these pipe dreams which paint a sunny picture of a bright economic future. How will the government power all these wonderful projects? According to Minister Osama Kamal, Egypt imports 25 per cent of its energy, so are we going to import more and neglect the yawning budget deficit? Who is really responsible here and where is their damned roadmap?

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