World Bulletin / News Desk
Egypt's new prime minister said on Sunday he was finalising an economic reform plan that would rein in hefty subsidies and said the economy is expected to grow in the current financial year by 3 to 4 percent or more if investment goals are achieved.
Hisham Kandil told Reuters in a rare interview that the government aims to cut the budget deficit, now running at about 8 percent of gross domestic product, by 1 percentage point in two years although he said that target was "dynamic".
Egypt has been on the ropes since foreign investors and tourists, two vital cash streams, fled after the uprising that toppled Hosni Mubarak last year. The revolt gave Egypt its first freely elected president, Mohamed Mursi, who appointed Kandil in July.
Once a darling of frontier market investors with growth of about 7 percent a year, the economy has sputtered along, growing just 2 percent in the financial year that ended in June.
Determined to draw in investors who want to see hefty cuts in fuel subsidies and other reforms, Kandil's cabinet also has to sell economic restructuring to Egypt's 83 million people, many in dire poverty and desperate to see the benefits of the revolt.
"For this year, we hope that we will get around 3 to 4 percent (growth) and after that we will jump to 4, and then 4-5, and hopefully in a few years we will come to 7 percent," the 49-year-old said, adding Egypt could hit 7 percent in four years.
Kandil said his government was finalising its economic reform programme and the draft would be reviewed next week with President Mursi.
Kandil said the government wants to make fuel and other subsidies more targeted and a coupon or smart card system to ensure the poor, rather than everyone, received subsidised butane cooking gas was expected to start in October.
There will also be cuts to gasoline subsidies in the coming months, he said, adding that these measures were part of efforts to reduce the budget deficit by 1 percentage point in the next two years, although he said targets would depend on what the population could tolerate.
"Those targets are dynamic. We have to look at what kind of support we will get and how the people will react to these measures," he said. "I am sure many of them will react positively, but of course we might have some difficulty so it will be a flexible thing too."
He said that after the president had reviewed the reform plans, there would be a public consultation about the programme. "Hopefully by the beginning of October we will open this for discussion. That also stands true for the IMF programme," he said.
He was referring to a request for a $4.8 billion loan from the International Monetary Fund, part of a bid by the government to shore up its finances after foreign reserves plunged to about $15 billion, about half their level before the revolt.
Responding to investor concerns that the Egyptian pound could be devalued, Kandil said the central bank was managing the currency in a flexible way but said investors should not delay.
"So investors should not wait for the pound to devalue. This is not going to happen soon. So now is the right time to get into the market," Kandil said, echoing comments made by the president to Reuters last month.
Meanwhile Kandil said the government needed to boost revenues as well as cut spending through more targeted subsidies, by casting the tax net wider.
"We need to look at our taxation system so it covers more people, not necessarily that we tax more. But it would be better to tax more people," he said. "We'll try to get them into the formal economy, and we will do that very soon."
Stabilised political and security situation, the launch of government initiatives toward fiscal consolidation and strong support from external donors are some of the reasons given for improved economic outlook.
Norway will not supply gas to Europe in case of supplies being cut by Russia, says Norwegian Energy Minister Lien
A fall in global oil prices, down more than 20 percent from this year's June high, means that ending costly diesel subsidies will save the government money without hurting consumers.
EU officials said the gas talks would continue in Brussels next week, with Poroshenko telling reporters that the financing still needed to be resolved.
The food-producing regions of Guinea, Sierra Leone and Liberia in West Africa have been severely affected by the worst outbreak on record of the viral haemorrhagic fever
Fall in crude oil prices will effect Iran's oil industry more than Western sanctions
Widodo currently plans to raise the price of both gasoline and diesel by 3,000 rupiah ($0.25) per litre by November, the advisor said.
Mario Pezzini and Romano Prodi jointly emphasized that Africa should be of priority for European Union’s future development policies.
Analysts say that some form of disruption of Russian flows to the EU is likely this winter
Chrysler is recalling about 470,000 cars and SUVs globally from model years 2011 through 2014 and equipped with a 3.6 liter engine and a 160 amp alternator
Oil prices continue to slide with surging production and weakening economic news. Venezuela has called for an emergency meeting of OPEC
Only one in four Russians said the measures would be harmful to the economy. About one in four of those polled also said sanctions could pose serious problems for them or their families
Zuma said the government wanted 30 exploration wells drilled in the next 10 years.
Bosnia and Herzegovina need to handle energy reforms at state level to implement EU's Third Energy Package
The five countries' horticulture exports will again be exempted from EU customs duty once the new deal comes into force.
Renzi's government has been keen to woo cash-rich buyers from China