Third time's a charm? Egypt gives stimulating economy with UAE money another shot
The interim government is currently preparing a new economic stimulus package that will focus on the industrial, housing and construction, communication and tourism sectors, “in order to restore economic activity and boost employment”, Minister of Finance Hany Kadry Dimian announced.
Dimian made the announcement during a meeting between International Monetary Fund (IMF) managing director Christine Lagarde and the Egyptian delegation, which flew to Washington this week to attend spring meetings between the IMF and the World Bank, a Tuesday statement from the ministry said.
The minister pointed out that the new package aims to revitalise and expand the activities of the private sector through removing the “bottlenecks” facing economic key sectors. He added that the package is deemed a “second phase” to the government stimulus plans, “as the first phase focused on governmental investments”.
After the ouster of former President Mohamed Morsi, the interim government announced two economic stimulus packages. The first package, with a value of EGP 29.6bn, was announced in August 2013 and focuses on infrastructure-related projects.
In December, the government had announced a second stimulus package, with a value of EGP 30bn, that focuses on development projects. The package is funded by $2.8bn (nearly EGP 20bn) in aid from the UAE; meanwhile, the remaining EGP 10bn will finance the minimum income system and government’s social security programmes.
The IMF is ready to help and respond to the demands of the Egyptian government, Lagarde said during the meeting, adding that the international organisation will continue to offer technical assistance to sectors the government deems are in need.
Listing the economic challenges facing the country, Dimian said that economic growth and employment rates need to rise, and that the needed financial resources to fund the recently increased spending on health and education must be generated.
Expenditure on the health and education sectors is expected to increase starting from the 2014/2015 fiscal year. According to the new ratified constitution, spending rates for the health sector will increase to 3% of GDP: 4% for education and 1% for scientific research.
The Egyptian delegation to the IMF included Minister of Planning and International Cooperation Ashraf Al-Araby, deputy governor of the Central Bank of Egypt Nedal Al-Asar, Egypt’s representative in the IMF and Egyptian ambassador to Washington Mohamed Tawfik.