Egypt eyes 5.8pc economic growth
Cairo, July 2, 2014
Egypt is targeting economic growth of between four and 5.8 per cent within the next three years while holding the budget deficit at 10 per cent of economic output, Finance Minister Hany Kadry Dimian told Reuters on Wednesday.
"It is expected that growth will rise gradually to between four and 5.8 per cent within the next three years," he said in a text message to Reuters.
That would be a marked acceleration from 2.1 per cent in the fiscal year ending June 2013 and the rate above three per cent targeted this fiscal year. New president Abdel Fattah al-Sisi has said growth should reach seven per cent by June 2018.
Dimian said he expected the budget deficit to stay at around 10 per cent of gross domestic product in the next three years "as we expect the additional spending on health and education will offset the effects of the annual reforms in energy (subsidies)."
A 2014/15 budget announcement on Monday unveiled deep cuts in energy subsidies aimed at shrinking Egypt's budget deficit, which has swelled since a popular uprising ousted autocrat Hosni Mubarak in 2011. Elected in May, Sisi has said he aims to cut the deficit to 8.5 per cent of GDP by June 2018 from 14 per cent in June 2013.
After three years of political turmoil including the ouster of two presidents, Cairo needs to find additional sources of revenue and curb spending on food and energy subsidies which have traditionally eaten up a quarter of state spending.
As well as cutting planned energy subsidies by 40 billion Egyptian pounds ($5.59 billion) in the fiscal year that began July 1, the government has introduced new taxes including a temporary five per cent tax on the wealthy over three years.
Spending on health is due to increase by 22.7 per cent to 51.7 billion pounds this year, and education spending by 13.3 per cent to 105.3 billion pounds, as the government seeks to fulfil social justice pledges written into the newly approved constitution.
Egypt has received billions of dollars in grants, loans and petroleum products from Saudi Arabia, the United Arab Emirates and Kuwait since former army chief Sisi overthrew President Mohamed Mursi in July following mass protests against his rule. - Reuters