News / Economy

Egypt's New Finance Minister Plans Stimulus, Not Austerity

This screen grab from state television shows Egypt's interim President Adly Mansour (R) swearing in Ahmed Galal (L) as finance minister in Cairo, July 16, 2013.This screen grab from state television shows Egypt's interim President Adly Mansour (R) swearing in Ahmed Galal (L) as finance minister in Cairo, July 16, 2013.
x
This screen grab from state television shows Egypt's interim President Adly Mansour (R) swearing in Ahmed Galal (L) as finance minister in Cairo, July 16, 2013.
This screen grab from state television shows Egypt's interim President Adly Mansour (R) swearing in Ahmed Galal (L) as finance minister in Cairo, July 16, 2013.
Reuters
— Egypt interim government will seek to avoid major austerity measures and instead work to stimulate the economy by improving security and pumping in new funds, the new finance minister, Ahmed Galal, said on Thursday.
 
The government, sworn in last week after the military ousted Islamist president Mohamed Morsi, inherits a budget deficit that since January has been running at around $3.2 billion a month, equivalent to almost half of all state spending.
 
It has been armed with $12 billion in aid from Gulf Arab countries who welcomed Morsi's removal. But with tens of thousands of pro-Morsi protesters on the street, it is under intense pressure to avoid unpopular steps such as increasing taxes or reducing spending on energy and food subsidies, which eat up a quarter of the budget.
 
“One of the important tools to deal with the budget deficit is stimulating the economy,” Galal told reporters at a briefing. “Stimulating the economy means tax revenues will increase and, in turn, the deficit will decrease,” said Galal.
 
An important step, Galal said, would also be to improve security and political stability after 30 months of political turmoil since Hosni Mubarak was toppled as president in a popular uprising.
 
“Political agreement is the best and shortest route to revive the economy because, if there is stability and security and agreement, tourists will come back and local and foreign investors will be more keen on investing,” Galal said.
 
“We will seek to pump more new funds into the economy and not follow austerity measures. We do not want to increase taxes sharply, that is if we increase them at all, and we do not want to lower spending in a way that will slow a revival of the economy,” said Galal.
 
IMF loan not priority
 
The comments on the government's economic policies are some of the most detailed since it was sworn in on July 16. Last week Galal said his main objectives were “fiscal discipline, macroeconomic balance, stimulating the economy to create jobs and achieve social justice, and efforts to have the fruits of growth reach all segments of society, especially those with low incomes”.
 
Galal on Thursday played down talk of resuming negotiations for a $4.8 billion International Monetary Fund loan that Morsi's government had been working on since August, which he said last week was only “part of the solution” to Egypt's problems.
 
The loan would be conditional on deregulation measures including a reduction in food and fuel subsidies.
 
Galal said it was more important for the government, only days into its tenure, to produce a package of economic policies first, which could take about a month to draw up.
 
“I'm not against dealing with the IMF within this framework, because it brings us credibility and new funds. There are advantages to dealing with the fund to achieve the aims you are after. But that doesn't mean that it is my starting point,” Galal said.
 
“We indeed want to make reforms. We need to make them, irrespective of the IMF,” he added.
 
The IMF for its part said on Thursday it would not resume loan talks with Egypt until its interim government gained international recognition.
 
Galal said the government would press ahead with a system of smart cards to limit the smuggling of subsidized products.
 
The government has yet to decide whether to amend the budget that Morsi's government drew up for the current fiscal year, which began on July 1, he said.
 
Galal said he had no problem tapping into Islamic sukuk bonds, which Morsi's government had been developing, but that it would not be a main tool for raising funds.

You May Like

Koreas Mark 61st Anniversary of War Armistice

Muted observances on both sides of heavily-armed Demilitarized Zone that separates two decades-long enemies More

Judge Declares Washington DC Ban on Public Handguns Unconstitutional

Ruling overturns capital city's prohibition on carrying guns in pubic More

Pricey Hepatitis C Drug Draws Criticism

Activists are using the International AIDS Conference to criticize drug companies for charging high prices for life-saving therapies More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Students in Business for Themselvesi
X
Mike O'Sullivan
July 26, 2014 11:04 AM
They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.