Egyptian Businesses Urged To Prove Benefits Of Market Reforms.

Egyptian Prime Minister Ahmad Nazif has urged business leaders to seize the opportunity provided by a shift in government policy to prove market reforms can benefit all Egyptians.

In an interview with the Financial Times published on Nov. 10, the 52-year-old prime minister, appointed in July with a mandate from President Hosni Mubarak to shake the Arab world's most populous country out of recession, said his government was determined to launch comprehensive economic reform. Egypt needs to provide 600,000 new jobs each year.

Nazif told the FT: "You can do that the old way, by creating jobs in government that don't really exist and which are really another way of masking unemployment. Or, you can do it by encouraging investment". His government would abandon its traditional role of absorbing new entrants to the labour market, he said. The cost of doing that would go instead towards providing incentives for business to expand.

Nazif, who earned a reputation for integrity and efficiency as telecommunications minister in an otherwise lacklustre former cabinet, said recent reductions in customs tariffs and a 50% drop in corporate tax rates would hit state revenues. These measures would be accompanied by a programme to revitalise the financial sector, privatise some state enterprises and cut back Egypt's legendary bureaucracy.

Nazif explained: "The hope is that the economy will move fast enough to repay. My message to business people is 'this is your chance to prove us right because if we are proven wrong, I don't think it will be easy to take these bold steps again'".

Egyptians have grown accustomed to governments that promise much and deliver a lot less. But the mood has been changing - at least among business people - since the cabinet reshuffle in July. Earlier this month the Cairo stock exchange hit record highs, out-performing most other emerging markets this year with an 83% rise in share prices.

Nazif said it could be up to two years, however, before the wider population began to feel the results. Subsidies for gasoline and other fuels would be maintained - food and other basics will continue to be subsidised - so that reforms were not jeopardised by popular resentment.

Many of the new ministers in Nazif's cabinet are close to Gamal Mubarak, the son of Hosni Mubarak, who has been president for 23 years. The younger Mubarak's high-profile role in attempting to modernise the ruling National Democratic Party (NDP) has fuelled speculation that he is being groomed as a potential successor. This has galvanised opposition groups, which have come together in recent weeks to demand direct elections to the presidency and the scrapping of emergency laws that stifle political life. Nazif insisted that political freedoms were gradually increasing.