Poor Egypt’s rich image

Press, 2 March 1981, Page 16

Poor Egypt’s rich image

By

SHYAM BHATIA in Cairo

- Egypt is experiencing considerable difficulty in. balancing its new “rich” image among foreign economists, who no longer see the country as an international “basket case” requiring urgent ‘economic assistance on the easiest possible terms against a darker picture of soaring' inflation and an ever-widening gap between rich and poor. The, President of the World ' Bank, Mr Robert .McNamara said in January that Egypt, because of • its improved economic performance, was no longer eligible for soft, loans from the International Development Association, (1.D.A.), a World Bank affiliate that channels aid to the poorest countries.. Typical I.D.A. loans allow for repayment over a -50-year period, with an additional grace period of 10 years, and nominal interest charges of less 'than 1 per cent per year. In fiscal 1980, Egypt was promised $215 million from I.D.A. for infrastructural projects. Similar I.D.A. loans are u*.likely to be forthcoming unless -there is any major setback in I.D.A.’s standard set of inter-related factors, including the per ,ca-

pita income, the prevailing balance of payments, cost of energy imports and the rate of economic growth. ■Egypt, has performed impressively in each of these sectors, although the national'per capita income' of $460 still ’ falls below the Bank’s poverty, ceiling of $6OO. The country’s GNP :s growing by an average of 8 per cent annually, foreign currency reserves exceed $1 billion and are' increasing steadily, the balance of payments is in surplus and, most important, Egypt , has become a net oil. exporter/ ;. • .The’ darker side to the same picture,, however, includes a nightmare inflation rate of more than .30 per cent, an unhealthy dependence on oil exports and workers’ remittances to shore up the balance of payments, and an ever-widening gap between rich and poor. The Egyptian Chancellor of the Exchequer, Dr Abdel Razak Abdel Meguid, would be ; less than human if he did not play up what he considers to be. the positive side of the economy. Last/’year, he told an interviewer of how he had conquered inflation, raised workers’ wages and set’ the country to become

the big power of the Middle East. His is an aggressive, surefire approach that worxs well, for example, with uncertain American investors. But, Dr Meguid’s audi-. ences include others besides the foreign private investors whose confidence he; is trying to win so desperately. When he speaks with glowing pride of his country's negligible inflation rate and balance of payments surplus, his listeners include the heads of aid-giving institutions like the World Bank and who then conclude that Egypt is not really in such a bad way. ;.There are other equally deserving recipients of-foreign aid. The World Bank was represented at the Aid Egypt Consortium that convened in January in. Aswan, Upper Egypt. Members of the consortium listened impassively to . the Egyptian plea for at least $3 billion in aid to keep the economy on course. But there was more than (re doubter present who wondered aloud if even half, the aid asked for arid’ later promised, would. be realised in the months to come. —• Copyright, London Observer Service.