The Challenge of Economic Reform in Egypt

On June 26, 2007, the Carnegie Middle East Center and Al-Ahram Center for Political and Strategic Studies held a workshop on the challenge of economic reform in Egypt. The presenters were Othman Mohamed Othman (Minister of Economic Development), Sufyan Alissa (Carnegie Endowment Middle East Center Associate), Ragui Assaad (Population Council), and Sherine El Shawarby (World Bank). The event took place at Al-Ahram Center in Cairo, Egypt

The goal of the workshop was to present and discuss the experience of economic reform in Egypt. This workshop provided analysis and perspectives in response to several key questions, including: To what extent has economic reform been advanced in Egypt? What is needed to accelerate the pace of balanced economic reform? Have state institutions been able to implement economic reform and handle its consequences? What has been the interplay between economic and political reform? Who are the winners and losers from economic reform?

The main components of the current economic reform program were presented by Othman Mohamed Othman, who emphasized the significant progress Egypt has made during the last few years. He stressed that the social side effects of economic reform are a key impediment to accelerating the reform process in Egypt, and argued that economic reform can only be advanced by developing a consensus among all actors, including the government and civil society institutions, on the meaning and ramifications of reform.

Sufyan Alissa outlined changes in the role of the state as a result of economic reforms initiated since 1991. He stated that reform programs have resulted in changes in the social contract between the state and society, but that little progress has been made in the fight against corruption, and in creating a competitive business environment. Dr. Alissa argued that Egypt needs to invest greater efforts in building efficient and transparent institutions to promote more aptly coordinated economic reforms with greater ownership and ties to social policies. 

Ragui Assaad discussed the impact of economic reform on the labor market. He stressed that the unemployment rate has declined in recent years, but that the increased deregulation of the labor market has led to a simultaneous decrease in job security. These phenomena are mainly a result of the diminishing role of the public sector in the labor market, as well as the process of privatization. He also pointed out that much work is needed in order to match education with needs of the labor market.

Finally, Sherine El Shawarby addressed the relationship between poverty and economic reform programs. She said that although the poverty rate, represented by $2 a day per person, has not increased in Egypt, the number of people who are suffering from extreme poverty, represented by $1 a day per person, has. She concluded that Egypt should develop a better social safety net in order to reach the poor and to improve their living conditions.

The discussion focused on the main ways to sustain economic reform, the impact of economic reform on income distribution, and the type of economic challenges currently facing Egypt, steps that could be taken by the Egyptian government and different stakeholders to promote balanced economic reform that address economic problems but also considers social realties.