News / Economy

Egypt Plans Extra Stimulus by Year-end, Suez Canal Project

A shopkeeper waits for tourists at a souvenir shop in old Cairo, Oct. 29, 2013.
A shopkeeper waits for tourists at a souvenir shop in old Cairo, Oct. 29, 2013.
Reuters
The Egyptian government will launch a new economic stimulus package by the end of the year, the finance minister said on Monday, bringing forward spending plans that will help revive the economy but put even more strain on state coffers.

Pointing to efforts to attract new investment, the military-backed government also said it would launch a tender to draw up plans to develop a corridor around the Suez Canal, reviving a mega-project tabled by deposed president Mohamed Morsi.

The government ministers were speaking at a Euromoney conference aimed at boosting confidence in an economy battered by close to three years of political turmoil, dating back to the 2011 uprising against President Hosni Mubarak.

Boosted by financial support from Gulf states hostile to Morsi's Muslim Brotherhood, the government installed in July is pumping billions of dollars into the economy of the Arab world's most populous nation.

Finance Minister Ahmed Galal said the second stimulus package, previously estimated at 24 billion Egyptian pounds ($3.5 billion), would be launched “before January.” The government had previously indicated it might only be brought in early next year.

The first stimulus package was initially set at 22.3 billion pounds, but the government announced on October 21 it had increased it to 29.6 billion pounds.

”The second package is a heavy burden on the budget especially since it is not yet clear where the financing will come from,” said Moheb Malak, an economist at Prime Holding.

”In terms of growth it is expansionary and a positive thing. However, most of the first package went into consumption,” he said, adding that the second package should be directed towards investment in areas such as transport infrastructure.

During Morsi's year in power, Egypt's budget deficit widened to almost 14 percent of gross domestic product (GDP), a number the government, backed by Gulf aid, hopes to reduce to around 10 percent this year.

It also hopes investors and tourists will bring dollars, taking pressure off the Egyptian pound, which has lost almost 16 percent of its value since the uprising and even more on the black market.

Fragile economy

Egypt's finances are in a precarious state with a massive deficit, but the government has rejected the conventional wisdom of International Monetary Fund-prescribed austerity measures.

If the plan fails, a new government expected to be elected early next year could find itself deep in debt, its currency overvalued and an economy in crisis.

In separate comments to financial daily Al-Mal, Galal said the ministry was coordinating with the planning ministry to decide the size of the new spending and the sources of finance “without that causing new strain on the public finances.”

Egypt's economy has been crippled by social and political turmoil since Mubarak's downfall in 2011, but has been helped in recent months by funding from several Gulf Arab States that are hostile to the Muslim Brotherhood.

Saudi Arabia, Kuwait and the United Arab Emirates promised a combined $12 billion in loans, grants and fuel shipments after the army, prompted by mass protests, overthrew Morsi on July 3.

Investment Minister Osama Saleh signaled the government intended to press ahead with plans to develop the Suez Canal corridor.

He said a tender to draw up the plans would be finalized by the end of the month and offered globally. He did not elaborate.

It echoes plans outlined by the Morsi administration to revive and expand a series of projects initiated in the late 1990s to turn the banks of the Suez Canal into a world trading and industrial center.

The Suez Canal is the fastest shipping route between Europe and Asia and a crucial source of foreign exchange income for Egypt, bringing in some $5 billion a year in tolls.

Malak said: “It is about time for it to receive additional investment and development so it can remain as a strategic route... there is a lot to do.”

He added that the size of the development and the time frame are still vague.

You May Like

Video Protests Continue in Ferguson, Spread to Other US Cities

Missouri officials say deployment of more than 2,000 National Guard soldiers helps curb second night of rampant arson and looting in Midwestern town More

Video Ebola, Crackdown on Illegals Hit Business in Guangzhou

Chinese city has largest community of Africans in Asia More

Video Legendary Lebanese Actress, Singer Sabah Dies at 87

Music and film diva, affectionately called 'Sabbouha' by millions of her fans, performed at Carnegie Hall in New York, Royal Albert Hall in London, Olympia in Paris, Sydney Opera House in Sydney More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8048
JPY
USD
118.04
GBP
USD
0.6382
CAD
USD
1.1270
INR
USD
61.892

Rates may not be current.