Mubarak the Younger Leads Economic Reforms: President Hosni Mubarak's Son, Gamal, Is Leading a Coterie of Free-Market Ideologues Who Seem Determined to Swing the Country into Free-Market Economics. A Series of Radical Reforms Is Already Altering Egypt's Economic Landscape. James Badcock Reports
Badcock, James, African Business
Egypt's President Hosni Mubarak seems to be clearing the way for a successor in the near future. He decided last summer to give a new prime minister, Ahmed Nazif, the reins of government for the last year of his fourth term in power. But the question still remains if the 76-year-old Mubarak will still opt for a fifth term or will stand aside and make way for another representative of the governing National Democratic Party (NDP).
Mubarak's son, Gamal, is tipped by many to be the prince in waiting--although Mubarak has stated clearly that he is not keen on what might appear to be the creation of a dynasty. Nevertheless, Gamal and his coterie of younger free-market reformers are in the ascendant within the circles of power.
The new government, led since mid-July by Prime Minister Ahmed Nazif, is focusing its efforts on revitalising the economy, characterised for so long by protection and subsidies. Economic reform is becoming less of an empty promise and more of an impending reality in North Africa's biggest nation.
At the 2003 inaugural NDP annual conference, political reform was the buzzword with bold constitutional reforms promised. With the exception of the suspension of state security courts and hard-labour prison sentences, (beside one or two other somewhat apolitical aspects of the state of emergency in effect for the past 23 years), the new era of democratic freedom cannot be said to have truly begun. This year's second NDP conference saw the economy given greater prominence than constitutional reform.
As in 2003, Gamal Mubarak was the leading light of the autumn event, pointing towards the party's new direction in his capacity as leader of the governing party's Policy Secretariat. Gamal was joined on stage by Nazif's economic team within the Egyptian cabinet: minister of finance, Youssef Boutros Ghali, minister of investment, Mahmoud Mohieddin, and minister of trade and industry, Rashid Mohamed Rashid.
The latter, previously a top executive with Unilever Egypt, has taken over a 'super ministry', formed by the new prime minister by merging foreign trade and industry into one.
A FREE-MARKET APPROACH
Presenting a report entitled Economic Trends, Gamal Mubarak and the government's financial team announced their overall aims for the country: fighting poverty; safeguarding consumers against monopolies; reforming customs and tax systems; privatising the state's assets; reforming the fiscal sector; and reinforcing the policies of disclosure and transparency.
Mubarak the younger said the NDP was aiming to liberalise the national economy and open it up to foreign competition. "To achieve this end, we have agreed that the old economic policies which depended on stripping society of the largest bulk of its income through taxes and high customs duties must be scrapped.
"From now on," Mubarak continued, "we will leave a large part of the national income in the hands of those who generate it, so they can spend it on products and expanding projects."
Boutros Ghali pointed to a lowering of customs duties as a sign that the administration was serious in its reforming aims. The average rate of duty on imports has been reduced from 14% to 9%, a move set to cost the Treasury around $486m.
Even more extraordinary is the new government's plans to overhaul the taxation system. Both income and corporate tax are set to fall from 42% to 20%, a move that will see Treasury revenues slashed by about $570m a year. This money, said the finance minister, "will now be available for individuals or society as a whole to spend on products and services, and even on establishing new projects".
The minister said he was opposed to providing greater direct subsidies to poor and limited-in-come citizens. "Fighting poverty can be done via helping society acquire more money through tax cuts and customs reductions, and this in itself will lead to a fairer distribution of income among individuals. …