Sunday, 13 November 2016

Cabinet hits the right notes at Akhbar Al Youm economic conference

The Ismail cabinet turned out in force for the Akhbar Al Youm economic conference yesterday. Among the highlights of remarks by members of the Cabinet economic group:

Prime Minister Sherif Ismail: “There are signs that the economy is improving, especially since Egypt received the loan such an improved credit rating.” On social welfare, the government is indeed trying to expand cash payments to qualified beneficiaries and plans to allocate EGP 1.3 bn to new programs, the PM said. The government is also planning to grow the budget for Takaful and Karama to EGP 2.5 bn, he added, according to Al Mal. Spending on education will also see an increase he added, with 30,000 new schools slated for development this year alone.  

Finance Minister Amr El Garhy: The government sees inflation cooling next year to 12% from a current 16% and a target in the 6% range is reasonable over the coming five years Al Mal quotes El Garhy as saying. The minister expects inflation could begin dropping in as early as two months from now, according to Al Shorouk. Other long term fiscal goals include reducing the budget deficit to 6% over the coming years from 12% and bring public debt to under 80% of GDP, Al Borsa quotes the minister as saying. The ministry is also looking to grow tax revenue to 16% of GDP from a current 12.7%.

El Garhy also denied that the Finance Ministry is in talks with Indonesia for a USD 500 mn loan. Al Shorouk had reported that Egypt is looking to obtain the loan by the end of 1Q17, citing unnamed sources. The source added that Egypt is in talks with industrial Asian countries for loans to finance energy and infrastructure projects.

Planning Minister Ashraf Al Araby: Declining tourism revenues were behind the government falling short of its 5% GDP growth targets, Al Mal quotes the minister as saying. (Growth came in at 4.3% instead.) Al Araby spoke about the ministry’s goal to eliminate inefficiencies in the subsidies system by purging the smart card system of ineligible beneficiaries. The move would allow us to expand subsidy spending on key goods by an additional EGP 20 per ration card.

(On a related note, President Abdel Fattah El Sisi has set a one-month deadline for completing the purge of the smart card system. The president made the remarks at a meeting with the cabinet and the CBE Governor, Al Mal reports. The smart card system was handed to the Armed Forces to run last week.)

Industry and Trade Minister Tarek Kabil: The government will launch the first phase of tendering land to the private sector in Upper Egypt for free before January, Kabil said, Al Borsa reports.

Electricity Minister Mohamed Shaker: Power subsidies are now costing the state EGP 60 bn as a result of the float and raising of fuel prices, up from EGP 30 bn. The ministry’s five year plan to cut subsidies are expected to eventually save the budget EGP 18 bn per month. Speaking on the feed-in tariff program, Shaker stated that the ministry has almost finished signing contracts with the companies which have financially closed on their projects, Al Borsa reports.

International Cooperation Minister Sahar Nasr: The ministry is looking to bring in USD 2 bn in foreign funding to support health, education, and youth unemployment programs, said Nasr. She stated that ministry’s strategy relies on the three pillars of human development, funding for basic services, and investments in infrastructure, Al Mal reports.

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