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

Australia-Cambodia Resettlement Agreement Raises Concerns

Agreement calls for Cambodia to accept refugees in return for $35 million in aid and reflects Australia’s harder line approach towards asylum seekers and refugees More

India Looks to Become Arms Supplier Instead of Buyer

US hopes India can become alternative to China for countries looking to buy weapons, but experts question growth potential of Indian arms industry More

Earth Day Concert, Rally Draws Thousands in Washington

President Obama also took up the issue Saturday in his weekly address, saying there 'no greater threat to our planet than climate change' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Are Energy Needs Putting Thailand's Natural Beauty at Risk?i
X
Steve Sandford
April 17, 2015 12:50 AM
Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.
Video

Video Are Energy Needs Putting Thailand's Natural Beauty at Risk?

Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.
Video

Video Overwhelmed by Migrants, Italy Mulls Military Action to Stabilize Libya

Thousands more migrants have arrived on the southern shores of Italy from North Africa in the past two days. Authorities say they expect the total number of arrivals this year to far exceed previous levels, and the government has said military action in Libya might be necessary to stem the flow. VOA's Henry Ridgwell reports.
Video

Video Putin Accuses Kyiv of ‘Cutting Off’ Eastern Ukraine

Russian President Vladimir Putin, in his annual televised call-in program, again denied there were any Russian troops fighting in Ukraine. He also said the West was trying to ‘contain’ Russia with sanctions. Henry Ridgwell reports on reactions to the president’s four-hour TV appearance.
Video

Video Eye Contact Secures Dog's Place in Human Heart

Dogs serve in the military, work with police and assist the disabled, and have been by our side for thousands of years serving as companions and loyal friends. We love them. They love us in return. VOA’s Rosanne Skirble reports on a new study that looks at the bio-chemical bond that cements that human-canine connection.
Video

Video Ukrainian Volunteers Search for Bodies of Missing Soldiers

As the cease-fire becomes more fragile in eastern Ukraine, a team of volunteer body collectors travels to the small village of Savur Mohyla in the what pro-Russian separatists call the Donetsk Peoples Republic - to retrieve bodies of fallen Ukrainian servicemen from rebel-held territories. Adam Bailes traveled with the team and has this report.
Video

Video Xenophobic Violence Sweeps South Africa

South Africa, long a haven for African immigrants, has been experiencing the worst xenophobic violence in years, with at least five people killed and hundreds displaced in recent weeks. From Johannesburg, VOA’s Anita Powell brings us this report.
Video

Video Sierra Leone President Koroma Bemoans Ebola Impact on Economy

In an interview with VOA's Shaka Ssali on Wednesday, President Ernest Koroma said the outbreak undermined his government’s efforts to boost and restructure the economy after years of civil war.
Video

Video Protester Lands Gyrocopter on Capitol Lawn

A 61-year-old mailman from Florida landed a small aircraft on the Capitol lawn in Washington to bring attention to campaign finance reform and what he says is government corruption. Wednesday's incident was one in a string of security breaches on U.S. government property. Zlatica Hoke reports the gyrocopter landing violated a no-fly zone.
Video

Video Apollo 13, NASA's 'Successful Failure,' Remembered

The Apollo 13 mission in 1970 was supposed to be NASA's third manned trip to the moon, but it became much more. On the flight's 45th anniversary, astronauts and flight directors gathered at Chicago's Adler Planetarium to talk about how the aborted mission changed manned spaceflight and continues to influence space exploration today. VOA’s Kane Farabaugh reports.
Video

Video Badly Burned Ukrainian Boy Bravely Fights Back

A 9-year-old Ukrainian boy has returned to his native country after intensive treatment in the United States for life-threatening burns. Volodia Bubela, burned in a house fire almost a year ago, battled back at a Boston hospital, impressing doctors with his bravery. Faith Lapidus narrates this report from VOA's Tetiana Kharchenko.
Video

Video US Maternity Leave Benefits Much Less Than Many Countries

It was almost 20 years ago that representatives of 189 countries met at a UN conference in Beijing and adopted a plan of action to achieve gender equality around the world. Now, two decades later, the University of California Los Angeles World Policy Analysis Center has issued a report examining what the Beijing Platform for Action has achieved. From Los Angeles, Elizabeth Lee has more.
Video

Video Endangered Hawaiian Birds Get Second Chance

Of the world's nearly 9,900 bird species, 13 percent are threatened with extinction, according to BirdLife International. Among them are two Hawaiian honeycreepers - tiny birds that live in the forest canopy, and, as the name implies, survive on nectar from tropical flowers. Scientists at the San Diego Zoo report they have managed to hatch half a dozen of their chicks in captivity, raising hopes that the birds will flutter back from the brink of extinction. VOA’s George Putic reports.
Video

Video Exhibit Brings Renaissance Master Out of the Shadows

The National Gallery of Art in Washington has raised the curtain on one of the most intriguing painters of the High Renaissance. Mostly ignored after his death in the early 1500s, Italian master Piero di Cosimo is now claiming his place alongside the best-known artists of the period. VOA’s Ardita Dunellari reports.
Video

Video Sidemen to Famous Blues Artists Record Their Own CD

Legendary blues singer BB King was briefly hospitalized last week and the 87-year-old “King of the Blues” may not be touring much anymore. But some of the musicians who have played with him and other blues legends have now released their own CD in an attempt to pass the torch to younger fans... and put their own talents out front as well. VOA’s Greg Flakus has followed this project over the past year and filed this report from Houston.
Video

Video Iran-Saudi Rivalry Is Stoking Conflict in Yemen

Iran has proposed a peace plan to end the conflict in Yemen, but the idea has received little support from regional rivals like Saudi Arabia. They accuse Tehran of backing the Houthi rebels, who have forced Yemen’s president to flee to Riyadh, and have taken over swaths of Yemen. As Henry Ridgwell reports for VOA, analysts say the conflict is being fueled by the Sunni-Shia rivalry between the two regional powers.

VOA Blogs

World Currencies

EUR
USD
0.9247
JPY
USD
118.78
GBP
USD
0.6657
CAD
USD
1.2190
INR
USD
62.395

Rates may not be current.