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Tuesday, 1 November 2016

House delivers threat of no confidence against the Ismail government

Prime minister on the defensive as some MPs call for vote of no confidence: Prime Minister Sherif Ismail faced a hostile reception at the House of Representatives yesterday as he spoke on the nation’s economic challenges. Reports suggest the PM’s remarks met with interruptions and jeers from the House MPs, who used the hearing as a forum to deliver their most scathing critique of the Ismail cabinet since their election — grandstanding on the order of Mark Anthony’s eulogy of Caesar.

Some MPs, including members of the House Budget Committee, have called for a vote of no confidence. Rising prices, the FX crisis, and last weekend’s floods were the biggest issues of the day. The frustrations began when Ismail and a number of ministers arrived late to the plenary sessions, Ahram Gate reports. Highlights of the day:

Ismail invited MPs to see the current situation as an opportunity to cut imports, strengthen reliance on local manufacturing and develop exports, Al Masry Al Youm reports. That said, the central bank will come up with a solution to the spiralling exchange rate soon, he added.

Devaluation is happening — but still no word on how (even if the IMF has already let slip the agreement was on a gradual easing): “We will take the appropriate action at the right time to ensure one single rate for the USD,” said Ismail.

An unexpected bombshell: The government is studying implementing a progressive tax after numerous MPs lobbied the government hard on the policy, Ismail said, according to Parlamany.

Speaking on rising prices and shortages of basic goods, Ismail noted that Egypt has reserves of basic commodities to last three months and pointed to recent announcements that the state would build a six-month reserve while allocating new funds to cover commodity imports. The government has pumped 250K tonnes of sugar into the market in October alone, he said.

Price controls would only apply to basic commodities, the PM said. If implemented, the controls would only be a temporary measure and are not reflective of the government’s preferred economic policy, AMAY quotes Ismail as adding.

Feeding into the mood in Parliament yesterday was continued fallout from weekend flooding that killed nearly 30 people after torrential rain in parts of the country. Ismail explained that the government had not planned for flash floods in Ras Ghareb, saying there have been none there in 50 years, adding that changing global weather patterns make preparations harder.

Surprisingly, one of the afternoon’s most vocal critics was Mohamed El Sewedy, head of the Support Egypt Coalition and the Federation of Egyptian Industries (yes, it’s legal to be both an MP and a member of a special interest group). El Sewedy blamed the government for its failure to contain the FX crisis and savaged the CBE for not providing a clear roadmap for how the crisis can be solved. El Sewedy said he regretted voting on legislation that imposed harsher sentences and fines on parallel market dealers without a guarantee that the CBE would make FX available, AMAY reports. As we noted yesterday, members of the FEI have begun calling for the government to sit down with FX bureaus.

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