By Sneha Shankar - Advisers from Western countries are trying to help Egypt’s new leader Abdel Fattah al-Sisi’s administration, which has been struggling to remodel the country’s economy, Reuters reported Saturday. Egypt, the most populous Middle Eastern country, is also benefitting from international support following Sisi's removal of the Muslim Brotherhood from power,
Egypt’s allies in the Gulf region, including the United Arab Emirates, Saudi Arabia and Kuwait have sent nearly $12 billion in cash and petroleum products to the strife-ridden country. If Egypt accepts the offer from the U.S. financial services company Lazard Ltd. NYSE:LAZ, a loan deal with the International Monetary Fund might be achieved, which would rekindle a level of trust necessary to spur investment.
"UAE are involved in the process, as they are among the country’s lenders. Lending money is not enough in itself. You also need to make sure the government has the means to identify what needs to change and execute it," an official told Reuters.
Egypt’s economy is predicted to grow at the rate of 3.2 percent for the next fiscal year ending 2015, while the country has been seeing a rapid increase in poverty and unemployment levels. Annual fuel subsidies in the country currently stand at nearly $19 billion, while issues like rampant corruption and a widening deficit have strangulated Egypt’s economy.
"This should be changed, but that's a political decision. Bermuda- based Lazard can only make recommendations, but in the end the government will decide," the official told Reuters, referring to the efforts the American bank is taking by sending specialists to do research reforms that could be undertaken to help Egypt.
While the privatization of state-owned firms was being explored by the previous leader Hosni Mubarak, who was ousted in 2011, and the current interim president, Adly Mansour, the announcement of any decision has been postponed because it would have been “a political decision” in the wake of the election.
But people close to Sisi have indicated that he might be willing to institute austerity measures, which previous leaders in the country have been hesitant to do, to get Egypt's economy on track.
"[Management consultant] Booz [Allen] has been working for the past seven months on a reform plan in collaboration with the Egyptian military," Tarek Zakaria Tawfik, the deputy chairman of the Federation of Egyptian Industries, who met with Sisi in May and has talked to the consultants to determine what course of action the new government will take.
Salah Diab, an Egyptian industrialist familiar with the consulting project, said according to Reuters: "If Sisi had intentions of maintaining the status quo regarding the unbalanced economic situation, he never would have entertained Booz,” said, adding: "Booz is preparing the Egyptian side ... If we are going to sit with the IMF, we would be prepared to have an intelligent argument."