Since the appointment of a reformist Government in July 2004, Egypt has embarked on a reform path. The reforms have been sustained until now (until the global crisis) and the Government has established a solid track record as one of the champions of economic reforms in the Middle East and North Africa region (MNA).
And what were these reforms?
Key reforms implemented over the last years include:
(i) Improved exchange rate management, building on the floating of the Egyptian pound and currency depreciation of 2003-04;
(ii) Reduction in import tariffs to a weighted average tariff of 6.9 percent (which puts Egypt at the lower end of the international trade tariff scale);
(iii) Rationalization of the tax system, including reduction of tax rates (highest corporate and personal rate is now 20 percent down from 32 to 40 percent) and improved tax administration (number of taxpayers rose from 1.7 million in 2004 to 2.5 million in 2006);
(iv) Improvements in budget management and controls (e.g., introduction of a single treasury account);
(v) Restructuring of the financial sector, to gradually disengage the State; and
(vi) Enhancement of the business environment
For the World Bank, the key was that Egypt had improved the cost of doing business.
Egypt is among the world’s 10 most active reformers for the fourth time based on the Bank’s 2010 “Doing Business” rankings. The country moved up to 106 from 116 among 183 economies worldwide in the overall ease of doing business ranking. Egypt made business start-up less costly, expedited the construction permit process, expanded the information available from the private credit bureau, and created commercial courts to speed up contract dispute settlements.
Like the IMF, the World Bank does mention lingering problems like unemployment (9.1 percent) and poverty (18 percent of the total population, 40 percent in rural areas). But, overall, it’s gung-ho about scaling up its program of activities “supporting the implementation of the ongoing reform program in a rapidly-growing Middle Income Country.”
What the World Bank fails to mention is that one of the conditions for “doing business” in Egypt has been repressing the population.