22 February 2013

Egypt: Planning Minister - Egypt's Economy Recovering Slowly

Minister of Planning and International Cooperation Ashraf el Arabi said that Egypt will invite the International Monetary Fund (IMF) within days to resume talks on the IMF loan, whose value is estimated at USD 4.8 billion.

He added that the Suez Canal revenues have retreated in the first half of the current FY 2012-2013 (from July - December) to reach $2.6 billion.

Meanwhile, el-Arabi said that Egypt's battered economy is recovering at a slow pace because of the political turmoil and security instability plaguing the country.

Speaking at a news conference yesterday, he said that the budget deficit may reach EGP 180 billion in the fiscal year (FY) 2012-2013, rating some 10 percent of the Gross Domestic Product (GDP).

He added that the budget deficit reached EGP 40 billion in the second quarter of the FY ending 31st of December, while the total deficit reached EGP 91.5 billion in the first half of the year.

The national growth rates in the first half of fiscal year 2012/13 reached 2.4 percent. The target in the second half is three percent, he said.

Consumption expenditure has been a key element to economic growth for it accounted for 3.1 percent of the growth during the past period, he added.

Investments implemented during the first half of 2012/13 were worth 112 billion pounds, which is 4.5 percent lower than the year before. The moderate investment performance weakened the economic growth rates, he said.

"We need to pump 250 billion pounds into investments to push growth rates to three percent", he said, noting that 77 percent of current investments are by the private sector while the rest are implemented by the public sector and public enterprise companies.

The drop in investments caused the gap in savings to increase to 6.9 percent of the gross domestic product, he added.

Domestic savings receded 7.9 percent of the GDP in the first half of the fiscal year from 9.9 percent the year before which, compounded by the dwindling of direct and indirect foreign investments, led the country to depend on foreign financing, especially remittances by workers abroad and grants and loans from international financing institutions, he said.

The Minister added that public income during the reported period reached 153 billion pounds, which is one percent more than the 116.6 billion pounds of the public income of the first half of fiscal 2011/12.

Public expenditure was 285.4 billion pounds compared to 243.6 billion pounds during the corresponding period a year before.

The reasons behind the rise in expenditures were attributed to the increase in subsidies, social benefits and bonuses and the payment of debt services.

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