Egypt to shrink spending to limit budget deficit

The Egyptian government announced on Thursday its decision to cut down spending by 15 to 20 per cent to limit the country’s budget deficit, state-run Al-Ahram news website reported.

The report said that the cabinet approved the decisions of an economic ministerial commission to minimise spending in the budgets of all ministries, government institutions, state companies and administrative authorities.

The government also decided to reduce the personnel of its ministerial foreign representatives by 50 per cent, saying their tasks will be carried out by foreign ministry diplomats instead.

“The rationalisation of spending will by no means affect the wages, salaries or the investment budget,” the government assured.

Egypt has been suffering economic recession over the past five years of political turmoil, leading to the decline of tourism, exports, foreign investments and foreign currency reserves.

The country’s budget deficit has exceeded $35 billion in the outgoing fiscal year 2015/2016, which led the country to resort to a $12 billion loan from the International Monetary Fund (IMF) whose initial agreement was reached in August.

Meanwhile, the new committee formed to set the local buying price for Egypt’s wheat crop has recommended raising it to 450 Egyptian pounds ($50.68) per erdab (150 kg) from the current price of 420 pounds, the agriculture ministry spokesman said on Thursday.

A ministerial-level committee was established to determine the proper price for local wheat and whether the payment system should be reformed to minimise opportunities for corruption, the supply minister said on Wednesday.

“The committee formed from the ministries of supply and agriculture agreed on a price per erdab of wheat for the coming season of 450 pounds,” agriculture ministry spokesman Hamid Abdel Dayim told Reuters.

“This proposal will be sent to the minister before being passed on to the cabinet for approval,” he said.

Egypt, the world’s largest importer of the grain, pays high prices for local wheat to encourage farmers to grow it.

Source: Reuters