Presentation by Presentation by Dr. Mahy Hassan Abd El-Dr. Mahy Hassan Abd El-

latiflatifDeputy Assistant Deputy Assistant

Minister for International Minister for International Cooperation Cooperation

The Egyptian Ministry of The Egyptian Ministry of Foreign Affairs Foreign Affairs

ESCWA ESCWA Preparatory Meeting on Preparatory Meeting on

FFDFFDDoha, QatarDoha, Qatar

29-30 April , 200829-30 April , 2008

I.I. Mobilizing domestic financial resources Mobilizing domestic financial resources for developmentfor development

In line with the agreed concept that countries have In line with the agreed concept that countries have the primary responsibility for their own the primary responsibility for their own development, the need to ensure an enabling development, the need to ensure an enabling domestic environment, including good governance domestic environment, including good governance and sound macro-economic policies, was deemed and sound macro-economic policies, was deemed vital by the Monterrey Consensus {for mobilizing vital by the Monterrey Consensus {for mobilizing domestic resources, encouraging the private sector domestic resources, encouraging the private sector as well as international investment} .as well as international investment} .

However, it is important in this respect to point out However, it is important in this respect to point out two main principles, the first is that any endeavor in two main principles, the first is that any endeavor in this regard has to be in line with national this regard has to be in line with national development priorities. The second is that there is development priorities. The second is that there is no "one size fits all" approach as circumstances vary no "one size fits all" approach as circumstances vary from one country to another.from one country to another.

Moreover, we have to fully recognize the nexus between Moreover, we have to fully recognize the nexus between creating an enabling domestic environment and creating creating an enabling domestic environment and creating a supportive international environment that a supportive international environment that complements the efforts of developing countries. It is complements the efforts of developing countries. It is equally important to note that good governance at the equally important to note that good governance at the national level, requires good governance at the national level, requires good governance at the international level.international level.

Developments in the global economy have significant Developments in the global economy have significant bearing on the internal economic environment. bearing on the internal economic environment. International economic imbalances, coupled with the International economic imbalances, coupled with the financial strain emanating from the low dollar, pose a financial strain emanating from the low dollar, pose a substantial threat to the stability of international substantial threat to the stability of international financial markets, with projections of a possible financial markets, with projections of a possible outbreak of another financial crisis leading to a setback outbreak of another financial crisis leading to a setback in world economic growth. This comes at a time, when in world economic growth. This comes at a time, when many developing countries, especially in Africa, remain many developing countries, especially in Africa, remain off track in achieving the MDGs, and lack the basic off track in achieving the MDGs, and lack the basic capacities to mobilize domestic resources.capacities to mobilize domestic resources.

{There are several areas where international {There are several areas where international assistance is needed to build national capacities of assistance is needed to build national capacities of developing countries such as:developing countries such as:

• Building and developing institutional infrastructure.Building and developing institutional infrastructure.

• Enhancing the role of national development banks Enhancing the role of national development banks in mobilizing domestic resources, in addressing in mobilizing domestic resources, in addressing market failure, and in improving the business market failure, and in improving the business climate by supporting small and medium sized climate by supporting small and medium sized enterprises (SMEs). Strengthening domestic enterprises (SMEs). Strengthening domestic financial markets, and encouraging lending in local financial markets, and encouraging lending in local currencies.currencies.

• Achieving a more efficient and diversified taxing and Achieving a more efficient and diversified taxing and revenue system.revenue system.

• Combating corruption, planning social security Combating corruption, planning social security programs, and setting up effective domestic programs, and setting up effective domestic financial markets.financial markets.

• Enhancing the "policy space" of developing Enhancing the "policy space" of developing countries to provide the requisite margin for countries to provide the requisite margin for national decision making vis-à-vis international national decision making vis-à-vis international commitments}.commitments}.

Since Monterrey, developing countries, including Since Monterrey, developing countries, including Egypt, exerted extensive efforts to create a more Egypt, exerted extensive efforts to create a more enabling internal business environment through enabling internal business environment through reforming and upgrading the institutional capacity of reforming and upgrading the institutional capacity of national financial, monetary, and regulatory national financial, monetary, and regulatory frameworks.frameworks.

Significant strides have also been undertaken in the Significant strides have also been undertaken in the areas of good governance, human rights, and areas of good governance, human rights, and combating corruption. {Recent reports from the UN combating corruption. {Recent reports from the UN and the BWIs indicate significant progress as well as and the BWIs indicate significant progress as well as in macro-economic policies in some developing in macro-economic policies in some developing countries.}countries.}

On its part, Egypt is currently drafting a On its part, Egypt is currently drafting a "Transparency Code for Egyptian"Transparency Code for Egyptian Companies" that Companies" that will provide businesses with a foundation for good will provide businesses with a foundation for good governance that corresponds with both the national governance that corresponds with both the national environment and with the country's legal frameworkenvironment and with the country's legal framework

Other steps have been undertaken to provide access Other steps have been undertaken to provide access to long-term funding for SMEs. In October 2007, to long-term funding for SMEs. In October 2007, Egypt launched a new stock exchange initiative Egypt launched a new stock exchange initiative aiming to give SMEs a fresh platform to raise capital. aiming to give SMEs a fresh platform to raise capital. {The new Bourse, the Nile Stock Exchange (NILEX), {The new Bourse, the Nile Stock Exchange (NILEX), eases some of the disclosure rules and lowers the eases some of the disclosure rules and lowers the paid-in capital requirement for SMEs.}paid-in capital requirement for SMEs.}

Egypt calls for a more coordinated dialogue among Egypt calls for a more coordinated dialogue among stakeholders that leads to the development of stakeholders that leads to the development of national microfinance industries. {Permanent access national microfinance industries. {Permanent access to financial services for poor and low-income to financial services for poor and low-income households will be ensured only through the households will be ensured only through the development and gradual integration of the development and gradual integration of the microfinance sector into the formal financial sector}.microfinance sector into the formal financial sector}.

II. II. Mobilizing international resources for Mobilizing international resources for development: foreign direct investment and development: foreign direct investment and

other private flows:other private flows:

The Monterrey Consensus, highlighted the The Monterrey Consensus, highlighted the importance of private international capital flows importance of private international capital flows particularly foreign direct investment (FDI), along particularly foreign direct investment (FDI), along with international financial stability, as vital with international financial stability, as vital complements to national development efforts .complements to national development efforts .

Recent years have witnessed a surge in the volume of Recent years have witnessed a surge in the volume of foreign investment, especially FDI, flowing into foreign investment, especially FDI, flowing into developing countries. Even though this increase might developing countries. Even though this increase might reflect an improvement in the investment reflect an improvement in the investment environment, it is important to note here that the bulk environment, it is important to note here that the bulk of these investments have flowed into a limited of these investments have flowed into a limited number of developing countries, and have targeted a number of developing countries, and have targeted a limited number of sectors, mainly extractive industries limited number of sectors, mainly extractive industries and primary commodities. This indicates the lack of and primary commodities. This indicates the lack of productive capacity of developing countries and the productive capacity of developing countries and the urgent need for intensifying diversification efforts urgent need for intensifying diversification efforts supported by donors and international organizations.supported by donors and international organizations.

In recent years, Egypt embarked upon a series of In recent years, Egypt embarked upon a series of

economic reforms aiming to attract investment economic reforms aiming to attract investment {through creating a healthier investment climate.} {through creating a healthier investment climate.} Reforms included fiscal, asset management reform, Reforms included fiscal, asset management reform, and simplification of business procedures.and simplification of business procedures.

Fiscal ReformFiscal Reform::- Introducing new personal and corporate tax code which - Introducing new personal and corporate tax code which

led to reducing tax rates by fifty percent.led to reducing tax rates by fifty percent.- Streamlining tax procedures and automating budget - Streamlining tax procedures and automating budget

process.process.- Reforming customs system and enhancing budget - Reforming customs system and enhancing budget

transparency.transparency.

Asset Management ReformAsset Management Reform:: The Ministry of Investment adopted a rigorous The Ministry of Investment adopted a rigorous

Asset Management Program in 2004, which led to the Asset Management Program in 2004, which led to the revitalization of the privatization program as follows: revitalization of the privatization program as follows:

- Sale of assets and shareholdings in public enterprises - Sale of assets and shareholdings in public enterprises has been invigorated due to new measures to improve has been invigorated due to new measures to improve transparency in the privatization process.transparency in the privatization process.

- Companies that remain in the public sector's - Companies that remain in the public sector's portfolio have undergone a series of reforms, e.g portfolio have undergone a series of reforms, e.g activating the role of general assemblies of holding activating the role of general assemblies of holding companies and other public companies.companies and other public companies.

Simplification of Business ProceduresSimplification of Business Procedures:: The General Authority for Investment (GAFI) The General Authority for Investment (GAFI)

initiated a reform program involving:initiated a reform program involving:

- Reduction of incorporation time for 3 days maximum.- Reduction of incorporation time for 3 days maximum.

- Reduction of Minimum paid in capital for LLC. - Reduction of Minimum paid in capital for LLC.

(EGP200).(EGP200).

- Reduction of incorporation fees.- Reduction of incorporation fees.

- Reduction of Publication fees.- Reduction of Publication fees.

- - Tax card issuance in 48 hours.Tax card issuance in 48 hours.

- Unification of bank certificate form to be issued in 1 - Unification of bank certificate form to be issued in 1

day.day.

- Acquiring the legal accountability for all corporations - Acquiring the legal accountability for all corporations

after registering in the commercial registry.after registering in the commercial registry.

- Ensuring Name Uniqueness of the corporation.- Ensuring Name Uniqueness of the corporation.

- Opening social insurance files within 48 hours.- Opening social insurance files within 48 hours.

- Sales Tax registration within 2 hours.- Sales Tax registration within 2 hours.

- Reduction of registration fees of real estate and - Reduction of registration fees of real estate and

automation of registration as both affect licensing automation of registration as both affect licensing

procedures and cost.procedures and cost.

-The right to establish investment zones authorized to -The right to establish investment zones authorized to

give licenses (2007 amendments to Investment Law give licenses (2007 amendments to Investment Law

8/1997) which reduces procedures, no. of respective 8/1997) which reduces procedures, no. of respective

entities involved, time and cost.entities involved, time and cost.

- - Reduction of registration fees of real estate (EGP Reduction of registration fees of real estate (EGP

2000 maximum).2000 maximum).

- Automation to save time and reduce procedures.- Automation to save time and reduce procedures.

- Relaxation of rules governing foreign ownership - Relaxation of rules governing foreign ownership

- The first Credit Bureau was established in Sept. 2005 - The first Credit Bureau was established in Sept. 2005

and started Oct. 2007.and started Oct. 2007.

- - New resolutions were issued by GAFI and CMA to New resolutions were issued by GAFI and CMA to

maximize the effect of laws including provisions for maximize the effect of laws including provisions for

protecting investors (ie. Inspection rules/new listing protecting investors (ie. Inspection rules/new listing

rules & takeover regulations).rules & takeover regulations).

- Application of corporate governance rules and - Application of corporate governance rules and

issuance of CG Code/ establishment of IOD for CG issuance of CG Code/ establishment of IOD for CG

certification.certification.

- Abolishment of stamp tax on checks.- Abolishment of stamp tax on checks.

- Reduction of taxes on advertisements.- Reduction of taxes on advertisements.

- - Reduction of corporate taxes by 50% (from 40% to Reduction of corporate taxes by 50% (from 40% to

20%).20%).

- Payment of any type of tax at any tax office (reduces - Payment of any type of tax at any tax office (reduces

the no. of payments).the no. of payments).

- Establishment of Large Tax Payers Center.- Establishment of Large Tax Payers Center.

- Reduction of time and procedures by automation of - Reduction of time and procedures by automation of

ports and the General Organization for Import and ports and the General Organization for Import and

Export Control (GOIEC).Export Control (GOIEC).

- Draft law for Special Economic Courts.- Draft law for Special Economic Courts.

- GAFI resolution concerning voluntary liquidation.- GAFI resolution concerning voluntary liquidation.

- On-going project for reforming bankruptcy rules in - On-going project for reforming bankruptcy rules in

the Law of Commerce.the Law of Commerce.

- Training courses for judges working on bankruptcy - Training courses for judges working on bankruptcy

issues.issues.

- Opening of IDA outlet at Alex. OSS. (operating - Opening of IDA outlet at Alex. OSS. (operating

licenses & land allocation).licenses & land allocation).

- Agreement between ABA and IFC to construct a DB - Agreement between ABA and IFC to construct a DB

Index.Index.

- Reduction of fees of dispute settlement run by GAFI. - Reduction of fees of dispute settlement run by GAFI.

- Co-operation agreement between GAFI and IFC to - Co-operation agreement between GAFI and IFC to

streamline business regulatory start-up process at streamline business regulatory start-up process at

Alex OSS (land assignment/ project Alex OSS (land assignment/ project

approval/industrial registration/operating license)approval/industrial registration/operating license)

- Appointment of Mackenzie to assist in promotion - Appointment of Mackenzie to assist in promotion

strategy development.strategy development.

- Twinning scheme with the German Investment - Twinning scheme with the German Investment

Promotion Agency.Promotion Agency.

- Anti-Trust Law passed.- Anti-Trust Law passed.

- Consumer Protection Authority established following - Consumer Protection Authority established following

the CP Law.the CP Law.

In light of such reforms, Egypt is ranked first among In light of such reforms, Egypt is ranked first among the best reformers in the world, according to the the best reformers in the world, according to the World Bank's annual report "Doing Business" based World Bank's annual report "Doing Business" based on 5 out of 10 indicators of business regulation, on 5 out of 10 indicators of business regulation, including the necessary time and cost to meet including the necessary time and cost to meet government requirements in business start-up, government requirements in business start-up, operation, trade, taxation and closure. Moreover, operation, trade, taxation and closure. Moreover, Egypt occupied top position in Africa according to Egypt occupied top position in Africa according to the World Investment Report of 2007 published by the World Investment Report of 2007 published by UNCTAD. Egypt has as well joined the OECD UNCTAD. Egypt has as well joined the OECD Investment Committee.Investment Committee.

Actually, there is work in progress in the field of Actually, there is work in progress in the field of investment focusing on enhancing "Greenfield" investment focusing on enhancing "Greenfield" investment which rose from twenty percent of total investment which rose from twenty percent of total FDI to nearly fifty percent in the past three years. FDI to nearly fifty percent in the past three years. Egypt is actively seeking this type of FDI as Egypt is actively seeking this type of FDI as indicated by the openness of investment law NO. 8, indicated by the openness of investment law NO. 8, under GAFI's administrative authority. The Law under GAFI's administrative authority. The Law allows one hundred percent foreign ownership and allows one hundred percent foreign ownership and permits foreign investment in sixteen distinct permits foreign investment in sixteen distinct sectors. As an amendment to the same Law a new sectors. As an amendment to the same Law a new mode of investment was introduced i.e. the mode of investment was introduced i.e. the “investment zones” to promote industrial and “investment zones” to promote industrial and services clusters. Furthermore, the Law does not services clusters. Furthermore, the Law does not impose any restrictions on the repatriation of profits.impose any restrictions on the repatriation of profits.

It is worth mentioning that FDI flows to Egypt have It is worth mentioning that FDI flows to Egypt have almost tripled from around $3,9 billion in the F.Y. almost tripled from around $3,9 billion in the F.Y. 2005 to more than $ 11,053 in the F.Y. 2007, 2005 to more than $ 11,053 in the F.Y. 2007, investments were mainly in new projects as well as investments were mainly in new projects as well as in expansions of already established projects in in expansions of already established projects in different sectors such as industry, tourism, services, different sectors such as industry, tourism, services, IT and construction. Reflecting FDI structural change IT and construction. Reflecting FDI structural change in Egypt, non-oil investment rose to represent sixty in Egypt, non-oil investment rose to represent sixty percent of total investment from twenty percent percent of total investment from twenty percent three years ago.three years ago.

III. III. International trade as an International trade as an engine for development:engine for development:

The Monterrey Consensus, emphasized the The Monterrey Consensus, emphasized the significance of working towards a universal, open, significance of working towards a universal, open, non-discriminatory and equitable multilateral trading non-discriminatory and equitable multilateral trading system, along with meaningful trade liberalization, system, along with meaningful trade liberalization, addressing the marginalization of LDCs in addressing the marginalization of LDCs in international trade and ensuring that world trade international trade and ensuring that world trade supports development to the benefit of all countries.supports development to the benefit of all countries.

Between 1995 and 2005, the volume of world trade Between 1995 and 2005, the volume of world trade in goods and services has doubled to 11 trillion in goods and services has doubled to 11 trillion dollars, and the share of developing countries has dollars, and the share of developing countries has reached 36% in 2005, while their share of world reached 36% in 2005, while their share of world imports has reached about 33%, an indication of the imports has reached about 33%, an indication of the important role they play in stimulating global important role they play in stimulating global growth.growth.

In 2005 as well, trade between developing countries In 2005 as well, trade between developing countries has increased, where 46% of their exports went to has increased, where 46% of their exports went to other developing countries, compared with only 40% other developing countries, compared with only 40% in 1995. {We have to note, however, that most of in 1995. {We have to note, however, that most of these exchanges were between a limited number of these exchanges were between a limited number of countries.}countries.}

{The objectives of the Doha round, within the {The objectives of the Doha round, within the framework of the WTO, include addressing framework of the WTO, include addressing imbalances in the multilateral trading system and imbalances in the multilateral trading system and enhancing developing countries' access to enhancing developing countries' access to international markets with a view to promoting international markets with a view to promoting implementation of poverty eradication programs.implementation of poverty eradication programs. } }

Egypt, through active participation in the Doha Egypt, through active participation in the Doha Round negotiations, aims to promote an effective Round negotiations, aims to promote an effective multilateral trading system, to promote the interests multilateral trading system, to promote the interests of developing countries, by supporting the of developing countries, by supporting the elimination of tariff barriers to exports of agricultural elimination of tariff barriers to exports of agricultural goods, and promoting the "aid for trade" initiative. goods, and promoting the "aid for trade" initiative.

Indicators of Egypt's economic performance have Indicators of Egypt's economic performance have reflected positive results where trade balance and reflected positive results where trade balance and balance of services and foreign investments showed balance of services and foreign investments showed a sustained upward trend. In 2006-2007 Surplus in a sustained upward trend. In 2006-2007 Surplus in the balance of services reached 11,4 billion dollars the balance of services reached 11,4 billion dollars (up to 8.9% of GDP), through the increase in the (up to 8.9% of GDP), through the increase in the proceeds of the Suez Canal, of tourism revenues, of proceeds of the Suez Canal, of tourism revenues, of net private remittances of Egyptian workers abroad, net private remittances of Egyptian workers abroad, and the decline of service payments. In addition, GDP and the decline of service payments. In addition, GDP rose from 417,5 billion L.E in 2002 to 731,2 in 2007 rose from 417,5 billion L.E in 2002 to 731,2 in 2007 indicating real economic growth of 7,1 % in the same indicating real economic growth of 7,1 % in the same year compared to 3,2% in 2002.year compared to 3,2% in 2002.

In line with the Ministerial Declaration of Doha in In line with the Ministerial Declaration of Doha in 2001, which encouraged foreign trade agreements 2001, which encouraged foreign trade agreements as a means to support development and reduce as a means to support development and reduce poverty in developing countries, Egypt has signed poverty in developing countries, Egypt has signed several trade agreements as the COMESA, the several trade agreements as the COMESA, the Greater Arab Free Trade Agreement (GAFTA), the Greater Arab Free Trade Agreement (GAFTA), the Aghadir Agreement (Jordan, Tunisia, Morocco), the Aghadir Agreement (Jordan, Tunisia, Morocco), the OUIZ Protocol, the Partnership Agreement with the OUIZ Protocol, the Partnership Agreement with the EU, and the Free Trade Zone Agreement with Turkey, EU, and the Free Trade Zone Agreement with Turkey, in addition to many bilateral agreements with Arab in addition to many bilateral agreements with Arab countries. In January 2007, Egypt signed an countries. In January 2007, Egypt signed an agreement establishing a free trade zone with the agreement establishing a free trade zone with the EFTA countries (Iceland, Norway, Switzerland and EFTA countries (Iceland, Norway, Switzerland and Lichtenstein) as an important step to activate the Lichtenstein) as an important step to activate the Barcelona process and to establish the Euro-Barcelona process and to establish the Euro-Mediterranean zone.Mediterranean zone.

IV. IV. Increasing international financial and Increasing international financial and

technical cooperation for developmenttechnical cooperation for development:: ODA was regarded by the Monterrey Consensus as ODA was regarded by the Monterrey Consensus as

the largest source of external financing and as the largest source of external financing and as critical to the achievement of the MDGs. Developed critical to the achievement of the MDGs. Developed countries, were urged to make concrete efforts countries, were urged to make concrete efforts towards the target of 0.7% of GNP as ODA to towards the target of 0.7% of GNP as ODA to developing countries and 0.15 to 0.20% to the LDCs developing countries and 0.15 to 0.20% to the LDCs {as reconfirmed in the Third UN Conference on {as reconfirmed in the Third UN Conference on LDCs.}LDCs.}

It was equally highlighted that effective partnerships It was equally highlighted that effective partnerships among donors and recipients should be based on the among donors and recipients should be based on the principle of national leadership and ownership of principle of national leadership and ownership of development plans.development plans.

Within the above context, some developed countries Within the above context, some developed countries have fared better than others, {but as a whole they have fared better than others, {but as a whole they increased their assistance from around 0.22% of GNP increased their assistance from around 0.22% of GNP in 2000 to 0.33% in 2005, 38% of which went to in 2000 to 0.33% in 2005, 38% of which went to Africa.} The year 2006, however, witnessed a decline Africa.} The year 2006, however, witnessed a decline of ODA by 0.3%.of ODA by 0.3%.

It is worth noting that between 2004 and 2005 debt It is worth noting that between 2004 and 2005 debt relief initiatives accounted for almost 70% of the relief initiatives accounted for almost 70% of the increase in ODA. Accordingly, this increase does not increase in ODA. Accordingly, this increase does not mean an increase in the financial flows to the mean an increase in the financial flows to the developing countries. {Estimates are that developing countries. {Estimates are that developing countries need around 150 billion dollars developing countries need around 150 billion dollars to be able achieve the Millennium Development to be able achieve the Millennium Development Goals (MDGs).}Goals (MDGs).}

At national level, total disbursements of ODA in 2005 At national level, total disbursements of ODA in 2005 reached 2,2 billion dollars and the biggest amount of reached 2,2 billion dollars and the biggest amount of total ODA was used to finance joint investment total ODA was used to finance joint investment projects. The amounts used for that purpose rose projects. The amounts used for that purpose rose from 36% in 2001 to 65% in 2005, while the from 36% in 2001 to 65% in 2005, while the percentage used to finance technical cooperation percentage used to finance technical cooperation decreased from 43% in 2001 to 22% in 2005, in the decreased from 43% in 2001 to 22% in 2005, in the same year, 11% of ODA went in support of the same year, 11% of ODA went in support of the balance of payments.balance of payments.

V. V. External debt:External debt:

Recognizing the fact that external debt is a real Recognizing the fact that external debt is a real challenge to development efforts undertaken by the challenge to development efforts undertaken by the developing countries, the Monterrey Consensus developing countries, the Monterrey Consensus aimed at creating a partnership between the North aimed at creating a partnership between the North and the South, thereby stressing the responsibility and the South, thereby stressing the responsibility of the developed countries to assist the developing of the developed countries to assist the developing ones in making their debts more sustainable.ones in making their debts more sustainable.

However, there are indications that current However, there are indications that current international initiatives in this regard, namely the international initiatives in this regard, namely the Heavily Indebted Poor Countries Initiative (HIPC) and Heavily Indebted Poor Countries Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI), are the Multilateral Debt Relief Initiative (MDRI), are slow in achieving progress and are not sufficiently slow in achieving progress and are not sufficiently inclusive to enable the LDCs, particularly in Africa, to inclusive to enable the LDCs, particularly in Africa, to achieve the MDGs.achieve the MDGs.

Needless to say that middle income countries {-a Needless to say that middle income countries {-a significant number of which are heavily indebted and significant number of which are heavily indebted and in which 41% of the world’s poor live- could not in which 41% of the world’s poor live- could not benefit from the above initiatives. We also note here benefit from the above initiatives. We also note here that this group of countries do not have access to that this group of countries do not have access to concessional loans provided by the donor concessional loans provided by the donor community.} Subsequently, we see merit in community.} Subsequently, we see merit in addressing this gap in the system, while at the same addressing this gap in the system, while at the same time, we welcome new initiatives by the time, we welcome new initiatives by the international community to deal with the debt international community to deal with the debt problem in a more comprehensive manner.problem in a more comprehensive manner.

Within the above context, it is important to note that Within the above context, it is important to note that new initiatives have to take into account the fact new initiatives have to take into account the fact that the underlying problem, in current initiatives in that the underlying problem, in current initiatives in the area of debt, is a reflection of a clear the area of debt, is a reflection of a clear "democratic deficit" in the existing international "democratic deficit" in the existing international governance structure.governance structure.

It is equally important to indicate that there is an It is equally important to indicate that there is an urgent need to enhance the accuracy, transparency urgent need to enhance the accuracy, transparency and accountability of credit and risk evaluation by and accountability of credit and risk evaluation by private rating agencies.private rating agencies.

We also emphasize the need to revisit excessive We also emphasize the need to revisit excessive conditionality {to loans provided to developing conditionality {to loans provided to developing countries,} as it limits the "policy space" that these countries,} as it limits the "policy space" that these countries need to address poverty-reduction related countries need to address poverty-reduction related issues.issues.

We further underscore the need to implement what We further underscore the need to implement what was agreed upon in Monterrey that donor countries was agreed upon in Monterrey that donor countries should take steps to ensure that resources provided should take steps to ensure that resources provided for debt relief do not detract from ODA resources for debt relief do not detract from ODA resources available for developing countries.available for developing countries.

We emphasize as well, the need to enhance technical We emphasize as well, the need to enhance technical assistance to developing countries with a view to assistance to developing countries with a view to strengthening their capacities in achieving sound strengthening their capacities in achieving sound debt management.debt management.

Egypt has started, since the 90 s of last century, to Egypt has started, since the 90 s of last century, to vigorously address its external debt problem. It vigorously address its external debt problem. It succeeded to reach an agreement with the Paris succeeded to reach an agreement with the Paris Club, while at the same time implementing a Club, while at the same time implementing a restructuring and reform program with the IMF and restructuring and reform program with the IMF and the World Bank, which led to a significant reduction the World Bank, which led to a significant reduction of debt from 50 billion of dollars in 1991 to 29,9 in of debt from 50 billion of dollars in 1991 to 29,9 in 2007.2007.

Innovative approaches could be widely used to deal with Innovative approaches could be widely used to deal with the external debt problem, such as debt-swap and debt the external debt problem, such as debt-swap and debt conversion programs,{ which include the transformation of conversion programs,{ which include the transformation of external debt into development projects. Debt Swap is a external debt into development projects. Debt Swap is a tool to confront the decrease in ODA, an ideal application tool to confront the decrease in ODA, an ideal application to the eighth millennium objective, and one of the means to the eighth millennium objective, and one of the means to face budget deficit.}to face budget deficit.}

Egypt was particularly able to achieve notable success by Egypt was particularly able to achieve notable success by adopting this approach through concluding agreements adopting this approach through concluding agreements with the countries concerned (France, Italy, Germany, with the countries concerned (France, Italy, Germany, Switzerland). Switzerland).

This could be an emerging issue that deserves reference to This could be an emerging issue that deserves reference to within the context of efforts aimed at enhancing the within the context of efforts aimed at enhancing the implementation of the Monterrey Consensus.implementation of the Monterrey Consensus.

VI. VI. Addressing systemic issues: enhancing the coherence Addressing systemic issues: enhancing the coherence and consistency of the international monetary, financial, and consistency of the international monetary, financial,

and trading systems in support of developmentand trading systems in support of development::

The Monterrey Consensus stipulated that in order to The Monterrey Consensus stipulated that in order to complement national development efforts there is an complement national development efforts there is an urgent need to enhance coherence, governance, and urgent need to enhance coherence, governance, and consistency of the international monetary, financial, consistency of the international monetary, financial, and trading systems. and trading systems.

To that end, it is vital to further enhance efforts To that end, it is vital to further enhance efforts aiming at reforming global economic governance and aiming at reforming global economic governance and the international financial architecture with a view to the international financial architecture with a view to achieving greater transparency and enhancing the achieving greater transparency and enhancing the effective participation of developing countries in effective participation of developing countries in international economic decision-making and norm-international economic decision-making and norm-

settingsetting..

Within the above context, we impress upon the need Within the above context, we impress upon the need for a comprehensive package that genuinely for a comprehensive package that genuinely addresses the concerns of all developing countries addresses the concerns of all developing countries rather than ad-hoc transitional arrangements. rather than ad-hoc transitional arrangements.

Since Monterrey, efforts by developing countries to Since Monterrey, efforts by developing countries to achieve the MDGs have been adversely affected by achieve the MDGs have been adversely affected by the global imbalances such as the rise of the global imbalances such as the rise of commodities prices, including the skyrocketing oil commodities prices, including the skyrocketing oil prices, the U.S. balance of payments deficit and the prices, the U.S. balance of payments deficit and the low dollar. These imbalances need to be addressed low dollar. These imbalances need to be addressed in an orderly fashion through enhanced, coherence, in an orderly fashion through enhanced, coherence, coordination, and cooperation in global financial, and coordination, and cooperation in global financial, and trading mechanisms, as well as exploring regulatory trading mechanisms, as well as exploring regulatory remedies.remedies.

The United Nations is in a position to play a pivotal The United Nations is in a position to play a pivotal role in contributing to the efforts aimed at reforming role in contributing to the efforts aimed at reforming the international economic, monetary and financial the international economic, monetary and financial system, due to its universal membership, and the system, due to its universal membership, and the Doha Review Conference is an opportunity to Doha Review Conference is an opportunity to operationalize these efforts. operationalize these efforts.

Finally, since Monterrey, developments have shown Finally, since Monterrey, developments have shown that there is a need to strengthen the existing that there is a need to strengthen the existing follow-up mechanisms of the financing for follow-up mechanisms of the financing for development process, and we are still looking into development process, and we are still looking into the different proposals that have been put forward the different proposals that have been put forward in this context.in this context.

Challenges and lessons learned from Egypt's Challenges and lessons learned from Egypt's development Processdevelopment Process

As a developing country Egypt is affected by As a developing country Egypt is affected by developments in the global economy that we have developments in the global economy that we have referred to earlier, other challenges are as follows:referred to earlier, other challenges are as follows:

InflationInflation: inflation rate reached 12.1 % in February : inflation rate reached 12.1 % in February 2008.2008.

- For addressing this high inflation rate, the - For addressing this high inflation rate, the Government of Egypt (GOE) is adopting new policies Government of Egypt (GOE) is adopting new policies and regulations including increasing the production and regulations including increasing the production of goods and services, and the efficiency of of goods and services, and the efficiency of distribution processes, as well as , promoting the distribution processes, as well as , promoting the effective implementation of the monetary policies of effective implementation of the monetary policies of the Central Bank of Egypt.the Central Bank of Egypt.

Unemployment:Unemployment: although the unemployment rate although the unemployment rate decreased from 10% in 2004 to 8.9% in 2008, GOE decreased from 10% in 2004 to 8.9% in 2008, GOE still has to work harder to maintain higher still has to work harder to maintain higher employment rates and to provide professional and employment rates and to provide professional and technical skills for youth to enable them to meet technical skills for youth to enable them to meet market needs.market needs.

- GOE allocated an amount of 500 million L.E. to face - GOE allocated an amount of 500 million L.E. to face such a challenge, there are also several vocational such a challenge, there are also several vocational and technical development programs that are being and technical development programs that are being implemented with key development partners i.e. implemented with key development partners i.e. Germany, EU, and USA.Germany, EU, and USA.

The need to extend social security servicesThe need to extend social security services to cover to cover new categories, to reach the most needy and to new categories, to reach the most needy and to restructure the system of subsidies. As for slums and restructure the system of subsidies. As for slums and remote areas, GOE has to provide the necessary remote areas, GOE has to provide the necessary infrastructure and to ensure fair distribution of infrastructure and to ensure fair distribution of health services, housing and job opportunities.health services, housing and job opportunities.

- To this end, GOE plans to extend social security - To this end, GOE plans to extend social security services to include 1 million deprived families by the services to include 1 million deprived families by the end of 2008, and to duplicate this number through end of 2008, and to duplicate this number through the coming three years. The plan also includes the the coming three years. The plan also includes the provision of cheap housing opportunities, micro provision of cheap housing opportunities, micro credits, and financial grants. credits, and financial grants. A ministerial A ministerial committee was established to ensure the continuity committee was established to ensure the continuity and fair distribution of subsidies.and fair distribution of subsidies.

Sustaining the current high growth rateSustaining the current high growth rate

- To face the dilemma of sustaining the current high - To face the dilemma of sustaining the current high growth rate, GOE is drafting a strategy to maximize growth rate, GOE is drafting a strategy to maximize the Private sector’s role in the development process the Private sector’s role in the development process in order to neutralize the effects of global rapid in order to neutralize the effects of global rapid changes.changes.

Population growthPopulation growth is an another challenge facing is an another challenge facing Egypt. Population has increased from 67.3 million in Egypt. Population has increased from 67.3 million in 2002 (2% growth rate ) to reach 72.7 million in 2007 2002 (2% growth rate ) to reach 72.7 million in 2007 (1.8% growth rate ).(1.8% growth rate ).