Egypt approves $3.2bn stimulus plan

2013-08-28 22:40
Share prices on the Egypt Exchange declined over 10%, after President Mohamed Mursi assumed sweeping powers that sparked clashes and polarised the country's politics. (AFP)

Share prices on the Egypt Exchange declined over 10%, after President Mohamed Mursi assumed sweeping powers that sparked clashes and polarised the country's politics. (AFP)

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Cairo - Egypt's cabinet approved on Wednesday an additional $3.2bn in spending on investment projects to boost the economy over the coming 10 months, Deputy Prime Minister Ziad Bahaa el-Din said.

He said the government would present its economic programme to Gulf Arab countries, in particular the United Arab Emirates, which has already agreed to finance medical projects and 10 wheat silos.

The army-backed interim government is keen to improve conditions for a deeply polarised population battered by more than two years of political and economic turmoil. Despite a mushrooming budget deficit, it is under intense pressure to avoid unpopular austerity measures.

Saudi Arabia, Kuwait and the United Arab Emirates have promised Egypt a total of $12bn in loans, grants and fuel shipments after Islamist President Mohammed Morsi was deposed by the army last month. Of that, $5bn has already arrived.

Even with the new spending, the government aims to reduce the budget deficit to 9% of gross domestic product in the fiscal year to end-June 2014 from 14% last year, Finance Minister Ahmed Galal said.

This it would do by streamlining spending, especially on energy subsidies, and through Gulf aid, Galal said.

The two ministers were speaking at a news conference after a cabinet meeting.

"There will be a gradual change in the price of energy for large investors in all energy products," Galal said, adding that the government was preparing a phased plan for the increases.

"Its implementation might be over two years and will begin before the end of the current year." He said the government planned no new taxes.

Read more on:    egypt  |  north africa

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