CAIRO: Egypt has adopted a stimulus plan with the aim of injecting LE 10-20 billion ($1.72-3.44 billion) into the economy in the 2011 calendar year, the country’s finance minister said on Sunday.
The plan, based on letting 5.7 million state employees borrow against salaries to make retail and other purchases, is expected to boost economic growth by between 0.50 and 0.75 of a percentage point, Minister Youssef Boutros-Ghali told Reuters.
"This non-budget stimulus plan is based on making sure that government employees can borrow from the banking system, with the guarantee of their salaries," Boutros-Ghali said on the sidelines of Egypt’s ruling party’s annual conference in Cairo.
Egypt’s economy was growing by around 7 percent in the three years until the global financial crisis struck, slowing growth to 4.7 percent in the 2008-9 fiscal year before recovering a little to 5.1 percent in 2009-10.
The government believes it needs a minimum of 6 percent growth to absorb new entrants to the labor force.
Boutros-Ghali said this month he expected the economy to grow 7 percent in the financial year beginning in July 2011 and by 8-8.5 percent the year after.
Newspaper Al-Akhbar said on Dec. 15 that the finance ministry had contracted with National Bank of Egypt, Banque du Caire and Alexbank, which is controlled by Italy’s Intesa Sanpaolo SpA, to provide the finance using the employees’ salaries as security.
