Government Prepares New Economic Stimulus Package: Finance Ministry

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Egypt’s government is currently working on the launch of a new economic stimulus package to boost the sectors that are necessary to economic development such as the industrial, housing and construction, communication and tourism sectors, the Ministry of Finance’s July bulletin stated.

The new package aims to revitalise and expand the activities of the private sector through removing the “bottlenecks” facing economic key sectors, the report said.

After the ouster of former president Mohamed Morsi, the interim government announced two economic stimulus packages. The first package, with a value of LE 29.6 billion, was announced in August 2013 and focuses on infrastructure-related projects.

In December, the government had announced a second stimulus package, with a value of LE 30 billion, of which LE 20 billion will be directed to development projects, funded by the United Arab Emirates. The remaining LE 10 billion, provided by the government, will finance the minimum income system and social security programmes.

The report noted that the second half of FY 2014/2015 is expected to witness a “development surge” as a result for implementing the projects of the two stimuli packages announced in 2013.

Ministry of Finance added that Balance of Payments (BOP) has registered an overall surplus of $2.2 billion during the first nine months of FY 2013/2014, compared to a $2.1 billion deficit in the same period in the previous fiscal year, the Ministry of Finance’s July bulletin showed.

The ministry stated that the improvements witnessed are attributed to a surge in cash transfer from Gulf countries in addition to a net official transfer of cash of $6.5 billion during the period of study.

Domestic liquidity has grown by 17% month-on-month by the end of May compared to a 16.5% growth in April, the ministry said. Meanwhile, the internal and external budget debt of the budget has registered LE 1.806tn in March 2014, equivalent to 88.8% of GDP, compared to LE 1.562tn in March 2013.

The Ministry of Finance stressed in the report that the reforms made to the 2014/2015 state budget aim to stimulate the economy, boost employment rates and support social justice.

The 2014/2015 budget was approved by President Abdel Fattah Al-Sisi after making adjustments on the draft that was referred to the presidency on the first day of the presidential elections. In the draft, the targeted revenues were around LE 517 billion while the expenditures were LE 807 billion; however, after amending it, revenues were set at LE 549 billion and total expenditures were set at LE 789 billion.

The adjustments Al-Sisi made included reducing petroleum subsidies to LE 100.2 billion from LE 104 billion in the draft, compared to LE 134 billion allocated in the FY 2013/2014 budget, and decreasing allocations for electricity subsidies from LE 33 billion in the draft to LE 27.2 billion, compared to approximately LE 18 billion in last year’s budget.

Source: Daily News Egypt