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

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.9211
JPY
USD
119.18
GBP
USD
0.6722
CAD
USD
1.2509
INR
USD
62.518

Rates may not be current.