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

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7866
JPY
USD
109.25
GBP
USD
0.6139
CAD
USD
1.1120
INR
USD
61.428

Rates may not be current.