Egypt’s cotton U-turn highlights policy issues

Standing waist-deep in a cotton field, Egyptian farmer Mohamed Khalil cannot mask his anger; after the Agriculture Ministry banned cotton imports to help local producers, the Cabinet abruptly vetoed the idea – the latest in a series of economic policy U-turns and delays under President Abdel-Fattah al-Sisi. “I can’t believe this. Just weeks ago they said we wouldn’t have to worry about imported cotton,” said the white-turbaned farmer, who rents a plot from the state to grow high-quality cotton at the Nile Delta village of Shubra Kheit.

Such schizophrenic decision-making is also a symptom of wider policy problems affecting Egypt, which is struggling to re-energize its economy and attract foreign investment after years of turmoil since 2011.

Sisi has imposed some tough reforms such as reducing fuel subsidies which swallowed up huge parts of the state budget, winning praise from the IMF.

But he has focused much of his economic policy on mega-projects like extending the Suez Canal and a planned new capital city.

Meanwhile, other state initiatives have run into trouble.

The government backtracked on plans to implement a capital gains tax in May, a central component of its reform agenda, after stock market players complained it would hamper investment.