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

China’s Influence Grows With New Infrastructure Bank

Multibillion-dollar China-backed and BRICS-supported Asian Infrastructure Investment Bank seen as possible challenger to such lenders as IMF, World Bank More

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

Rabbi Michel Serfaty makes the rounds in his friendship bus to encourage dialogue and break down barriers between the two groups More

Post-deal Iran Leaders Need 'Economic Momentum' to Solidify

Economists say deal could inject more than $100 billion into coffers - not enough to entirely rescue ailing economy - but maybe adequate to create 'economic momentum' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Gay Marriage Ruling Yields Real-life Impacti
X
Michael Bowman
June 28, 2015 10:05 PM
Friday’s landmark Supreme Court decision legalizing same-sex marriage throughout the United States is an outcome few thought possible just years ago, and shows a nation that increasingly tolerates and even celebrates the hopes and aspirations of gay people. VOA’s Michael Bowman spoke to a same-sex couple that will benefit from the high court ruling, and to a Christian scholar who is apprehensive about its potential consequences for America’s faith community.
Video

Video US Gay Marriage Ruling Yields Real-life Impact

Friday’s landmark Supreme Court decision legalizing same-sex marriage throughout the United States is an outcome few thought possible just years ago, and shows a nation that increasingly tolerates and even celebrates the hopes and aspirations of gay people. VOA’s Michael Bowman spoke to a same-sex couple that will benefit from the high court ruling, and to a Christian scholar who is apprehensive about its potential consequences for America’s faith community.
Video

Video Syrians Flee IS Advance in Hasaka

The Syrian government said Monday it has taken back one of several districts in Hasaka overrun by Islamic State militants. But continued fighting elsewhere in the northern city has forced thousands of civilians from their homes. In this report narrated by Bill Rodgers, VOA Kurdish Service reporter Zana Omer describes the scene in Amouda, where some of the displaced are taking refuge.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video S. Korea Christians Protest Gay Rights Festival

The U.S. Supreme Court decision mandating marriage equality nationwide has energized gay rights supporters around the world. Gay rights remain a highly contentious issue in a key U.S. ally, South Korea, where police did a deft job Sunday of preventing potential clashes between Christian protesters and gay activists. Kurt Achin reports from Seoul.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video Nubians in Kenya Face Land Challenges

East Africa's ethnic Nubians have a rich cultural history that dates back thousands of years, but in Kenya they are facing hardships, including the loss of lands they have lived on for generations. They say the government has reneged on its pledge to award them title deeds for the plots. VOA's Lenny Ruvaga reports.
Video

Video Syrian Refugees Return to Tal Abyad

Syrian refugees in Turkey confirm they left their hometown of Tal Abyad because of intense fighting and coalition airstrikes, not because Kurdish fighters were engaged in ethnic cleansing, as some Turkish officials charged. VOA Kurdish Service reporter Zana Omer, in Tal Abyad, finds that civilians coming back to the town agree, as we hear in this report narrated by Roger Wilkison.
Video

Video Military Experts Question New Russian Tank Capabilities

Russia has been showing off its new tank design – the Armata T-14. Designers claim it is 20 years ahead of current Western designs - and driving it feels like playing a computer game. But military analysts question those assertions, and warn the cost could be too heavy a burden for Russia’s struggling economy. Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.
Video

Video In Syrian Crisis, Social Media Offer Small Comforts

Za’atari, a makeshift city in Jordan, may be the only Syrian refugee camp to tweet its activities, in an effort to keep donors motivated as the war in Syria intensifies and the humanitarian crisis deepens. Inside the camp, families say mobile phone applications help hold together families that are physically torn apart. VOA’s Heather Murdock reports.
Video

Video Chemical-Sniffing Technology Fights Australia's Graffiti Vandals

Cities and towns all over the world spend huge amounts of resources battling graffiti writers who deface buildings, public transport vehicles and even monuments. Authorities in Sydney, Australia, hope a new chemical-sniffing technology finally will stop vandals from scribbling on walls in the passenger areas of commuter trains. VOA’s George Putic has more.
Video

Video Cambodia Struggling to Curb Child Labor

Earlier this year a United Nations report found 10 percent of Cambodian children aged 7-14 are working – one of the highest rates in the region – and said one in four children in that age bracket are forced to quit school to help their families. Although the child labor rate has dropped over the past decade, Cambodia has a lot more to do – including keeping more children in school. Robert Carmichael reports for VOA from Phnom Penh.

VOA Blogs

World Currencies

EUR
USD
0.8926
JPY
USD
123.71
GBP
USD
0.6358
CAD
USD
1.2364
INR
USD
63.600

Rates may not be current.