Government figures lie to Sisi about new project investments

Abdel Hafez El Sawy

At the Youth Conference on September 14, Abdel Fattah el-Sisi tried to escape the answer to accusations made against him by the contractor Mohamed Ali, who oversaw the construction of presidential palaces and palaces. El-Sisi stated that four trillion pounds ($ 246 billion) had been spent on new projects. During the past six years.

Although the economic data released by the government after the July 2013 military coup lacks credibility, it remains the only source that can be built upon, revealing the extent to which Sisi has stated the reality.

The figure cited by El-Sisi understands that this expenditure is related to the spending of the government, the public business sector and economic and service bodies on investment during these years, which makes us present the matter according to this framework, and then in the broader framework of the total investment involving the private sector with the above sectors.

Government figures are lying to him
Referring to the data of the Egyptian Ministry of Finance through its monthly financial report, the issue of June 2019 to find out the reality of the investments carried out in Egypt during the past six years, which is available through the statistics contained in the report, we find that the report includes the figures for the period from 2014/2013 - 2018 / 2017.

Total expenditure on investments

Source: Egyptian Ministry of Finance, monthly financial report, June 2019

Ministry of Planning, Monitoring and Administrative Reform, Medium Term Plan for Sustainable Development 2019/2018 -2022/2021, p. 83.

If we look at the figures for the actual implemented investments, we find that they amount to only 2.2 trillion pounds, but these figures are only five years after the coup of July 2013, and in addition to 2019/2018, we find that the total spending on investments in Egypt is about 3.1 trillion fairy.

Taking into account the 2019/2018 estimate data, it is highly likely that the actual implemented investments will fall below this figure, which is monitored by studies of the Government's performance in this area over the past years.

The most important observation in this area is that these figures include all investments in Egypt, whether from domestic or foreign investments, as well as investments of the public sector, public economic and service agencies and the government, as well as the private sector, thus talking about the total investments and justifying that these investments were financed by debts is unacceptable. Which we will show in the following lines.

Debts were not spent on investments
Sisi tried to justify his erroneous policy of expanding public debt over the past six years. "These funds came from internal and external loans, and they will be repaid," he said.

Public debt has jumped to high rates over the past six years, with domestic debt increasing from 1.4 trillion pounds in June 2013 to 4.2 trillion in March 2019, and external public debt jumping from $ 43 billion to $ 106 billion in The same period.

This means that the public debt (domestic + foreign) has increased during the past six years by about 3.8 trillion Egyptian pounds.

According to finance ministers who have rotated the cabinet seat for the past six years, a good part of the foreign debt has been directed to boosting foreign exchange reserves, as well as paying the budget deficit, which is dominated by consumer spending rather than investment spending.

Hence, it is necessary to show the value of public investments spent by the government over the past six years, to show the fact that debt is used to finance investments, by monitoring the proportion of public investments from the total investment.

Contribution of public and private investments

In total expenditure on total investments

The contribution rate of each sector was monitored through the follow-up reports of the plan issued by the Ministry of Planning for the years, as well as the plan for 2019/2018.

From the data mentioned in the table above, we find that the private sector accounted for no less than 50% in any way during the period only in 2018/2017, which means that Sisi's claim that the debt spent on investments is false, because during the six years we discover that the contribution Public and government investments, the public business sector, and economic and service bodies did not exceed 1.5 trillion pounds at best, not four trillion pounds, Sisi said.

The citizen has become poorer
It is economically obvious that in the case of increased investments in an economy, it usually has positive effects on various sectors of economic activity, whether productive or service, and the life of individuals to recover new jobs generated by investments and new projects, and is supposed to improve the income of individuals with projects New, increases their demand for goods and services, and increases their savings.

But the reality over the past years - in which Sisi claimed to have created new projects by about 4 trillion pounds - has increased poverty in society by 5% in June 2019 compared to the poverty rates in 2015, according to estimates by the Central Agency for Public Mobilization In addition, the World Bank went above and beyond that percentage, about 60% of Egyptian society is either poor or vulnerable to poverty.

This means that the incomes of individuals did not improve with the alleged new projects, but their lives were better before the advent of Sisi and his economic policy, which greatly affected the economic and social conditions in Egyptian society.

It is fair to note that there have already been new projects in the Egyptian economy over the past six years, such as the expansion of the Suez Canal, the launching of a large part of the new administrative capital, as well as the implementation of some projects related to roads and arches.

However, the feasibility and economic returns of these projects were negative, because, according to El Sisi himself, they were not implemented through a feasibility study, and they represent what is called "escape forwards", ie escape from the real problems of the Egyptian economy in the productive sector in the agricultural and industrial activities, and work to meet the needs of Egypt from Strategic and necessary commodities, such as wheat and other agricultural commodities, or machinery, equipment and means of transport.

Projects for the benefit of abroad
We pointed out that the benefit of the Egyptian citizen has been limited - and even poorer - from the projects he implemented during the past six years, but when we look at the figures on foreign trade to Egypt, we find that the volume of merchandise imports has increased significantly, from $ 57 billion in June 2013 To $ 63 billion in June 2018, i.e. an increase of about $ 6 billion during the comparative years.

The increase in the percentage of merchandise imports over the past six years indicates that the Egyptian economy has increased its dependency abroad, and that new projects have not succeeded in reducing the import movement, or at least stopping their value in June 2013.

In view of some of the major projects that have been implemented, such as the expansion of the Suez Canal, the use of excavators for foreign companies, as well as the use of expertise offices, as well as new capital projects, which rely mainly on the provision of Chinese companies to provide expertise houses and the supply of equipment and production requirements within the terms of the borrowing contracts to finance these Projects.

The same is true of the projects announced by the Ministry of Military Production regarding its intention to implement solar or desalination projects as they depend on financing through loans from China, as well as importing production lines from Chinese companies.

In light of Sisi's statements that these projects were financed by domestic and foreign debt, it is natural that there is a relationship between the financing instrument and the return from projects, so that these projects can pay off the debt burden.
(Installments + interest) of their own revenues, but the fact is that these projects in most of them did not achieve self-returns, except for some of the ways to which to charge traffic.

Thus, we found that the burden of interest only in the state budget jumped to 38% of the value of public expenditure in the fiscal year 2019/2020, and undoubtedly that about 25% of the value of interest paid on loans go to external loans.

Projects needed by the citizen
While Sisi projects are heading for roads and bridges, which may be unnecessary at the moment, or what has been done in the new administrative capital (the largest mosque, the largest church, or the largest hotel) or the government to crowd out the private sector in the land trade And real estate, or other activities of the civil economy, we find that the citizen needs other projects.

Citizens need sustainable and productive production projects in order to secure jobs, stable income and high added value.

Egypt needs to reform the state's textile and apparel projects so that clothing is not imported into a society of more than 100 million people.

The citizen needs projects that provide him with food and medicine so as not to be vulnerable to the vagaries of the international market, nor vulnerable to the needs of transnational corporations.

At the same time, it ensures the safety of the Egyptian national security in these areas, which is the real challenge that deserves the proper use of the financial resources of the society, to benefit from local savings or resort to borrowing.

The reality is that Egyptian citizens are forced to enter the informal labor market, as well as micro and small enterprises, in order to obtain the basic requirements of life. They have little help from the government in this regard, while other countries are making clear efforts in this regard. Organizing exhibitions and local and foreign markets for products of these projects.

Finally, in an economy managed by a single person who decides to set up or dispose of projects or how to finance and administer them, the consequences will be dire, as in Egyptian society. I found him mismanaged economic resources, increased social burdens, in addition to dictatorship and oppression.

Egyptian society needs a new economic and social experience characterized by science, censorship and accountability, all within a framework of democracy and freedom in which the practice of supervisory institutions, and the rule of law and accountability, are active.