Economic plan in draft constitution is vague, say experts

Mixed views among Egyptian economists about upcoming referendum

GMT 15:54 2012 Thursday ,13 December

Arab Today, arab today Mixed views among Egyptian economists about upcoming referendum

The draft constitution has been put together by Egypt's Constituent Assembly
Cairo - Mohamed Salah

The draft constitution has been put together by Egypt's Constituent Assembly There are mixed views among Egyptian economists about the effect of the upcoming constitutional referendum on the Egyptian economy. Arabstoday spoke to economists and bankers about the referendum and what sort of a part it can play in helping the country get back on the road to economic recovery and growth.
Economic expert and member of the Egyptian Council for Economic Affairs, Mohammad Farouk, said that a stable nation is based on four pillars of power. "The country cannot be based on one pillar. At the moment we only have executive authority represented in the presidency. There's the parliament with its two chambers, the government, and the judiciary."
He added that the constitution is a rulebook for the four pillars of the state to work together, with the referendum being a democratic practice. "The referendum is an essential part of democracy because it allows everyone in the Egyptian society to know their rights and duties."
He said that Saturday's vote will help boost the economy at both the domestic and international level. "It will lead to stability and the economic credit rating of Egypt will be upgraded, giving us an incentive to attract local and foreign investments and to work together within the framework of fiscal and monetary policies."
Farouk said economic growth can be the the trigger for positive progression in other industries. "Economic power can lead to advancement in technology and ultimately the military force." He said the IMF's decision to postpone its $4.8bn loan to Egypt shows the country's fiscal and monetary policies are "flawed and discouraging for investors."
According to Farouk, the new constitution states that an authority to develop the economy will be established, in addition to an overall monitor over the economy to create of an investment friendly climate. “That is perfect, but implementation is always the problem," added Farouk.
A member of the Economic Committee in the Freedom and Justice Party, Mohamed Gouda, told Arabstoday that the government is currently considering how to provide people with essential resources during this transitional period, without focusing on development. He said that building state institutions is the priority, before looking at ways of growth.
He said that "the absence of a clear economic vision for the country in the constitution, is an advantage and not a mistake," adding that Egypt must build on previous international experience in constructing an economic identity. "The United States does not have a clear economic identity in the constitution, although it is abiding by the free market approach."
Meanwhile, the Chairwoman of the Board of Directors at Al-Mashoura financial services, Basant Fahmi, thinks the constitution does not provide a clear vision, something which has confused the investors. "What does the future hold for public sector companies or loss-making businesses? The volatile nature of economic decision-making in Egypt is being reflected in the constitution," she said.
Fahmi said that the economy is being dominated by political decisions, and shared her concerns about the future. "If the new constitution is rejected in the coming referendum, it will have an even bigger impact on investments due to the length of time needed to draft a new constitution and hold parliamentary elections."

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