CAIRO: Minister of Finance Youssef Boutros Ghali said Egypt’s budget deficit for fiscal year 2009/10 will come in at 8.5 percent of GDP, predicting that the figure will fall to 7.9 percent for the coming financial year beginning in July.
Speaking during a press conference at the Journalists’ Syndicate, Ghali said the total budget deficit is expected to reach LE 109.2 billion, with revenues at LE 258.4 billion.
In a faxed statement to Bloomberg, the Cabinet predicted revenues will increase to LE 280.5 billion for fiscal year 2010/2011.
To achieve the increase in revenues and decrease in deficit, Ghali called for the passage of new pension legislation that would allow savings to increase from $14 to $18 billion. Combined with an expected $10 billion in FDI, the total of $28 billion would lead to the lowered deficit.
“The Egyptian economy is in transition, he said, enumerating the challenges of the financial crisis. He explained that the economic advances, including successive years at 7 percent GDP growth, had raised the quality of life for many Egyptians. However, the effects of the financial crisis had erased these benefits to the majority of citizens.
With stimulus packages totaling LE 32 billion, the fear of recession in Egypt was largely mitigated; national GDP grew 4.7 percent last year and is projected to grow 5.8 percent for fiscal year 2010/11.
Yet Ghali explained that to sustain growth, the country needs to invest LE 120 billion in infrastructure every year for the next three years, emphasizing that Egypt cannot borrow the money against the future of its children.
He touched on the financial woes engulfing Greece, Spain and Portugal and Egypt’s vulnerability to international economic fluctuations.
In the end, he turned the responsibility towards the Egyptian government, focusing again on the pension plan. He harangued a system that allows only LE 1,200 a month (about $220) as its maximum payment for a lifetime of service.
