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."
The Ministry of Finance said that Denmark has written to China to "announce its intention to apply to be a founding member" of the AIIB.
Experts state that the crisis poses risks to the region, which is significant for oil production and exports in the world.
Federal Reserve removes word 'patient;' interest rate increase expected within months. Yellen says timing of rate rise 'not decided,' but will come anytime after April; holds current rates at 0 to 0.25 pct.
Many emerging-market currencies have fallen against the dollar in recent weeks
Anticipated Federal Reserve interest rate hikes making dollar strong against most emerging market currencies, Deputy Prime Minister Ali Babacan says.
European Statistical Agency says slight decline fuelled by drop in production of durable consumer goods.
EU will use all its foreign policy instruments to establish strategic energy partnerships with producing and transit countries.
Dollar strength and waning investor confidence are driving the lira lower
Greece has already received two bailouts totalling 240 billion euros but fellow euro zone member Ireland said last week that it would have to negotiate a third programme.
The Ukraine crisis has tested the loyalties of Bulgaria, a Balkan country with historical ties to Moscow and heavily dependent on Russian energy supplies.
Syria expels three United Nations aid workers hindering aid development in the country
Russia has overcome a "psychological barrier" and is ready to deepen its economic ties with China, Deputy Prime MinisterArkady Dvorkovich said
With Chancellor Angela Merkel's right-left coalition plus the opposition Greens, it was the biggest majority for any euro zone rescue package so far in the 631-seat chamber.
The agreement commits Tanzania, Kenya, Uganda, Rwanda and Burundi to cooperate with the United States in customs issues, ease red tape at borders, reduce customs wait times and harmonize trade standards.
Sri Lankan President Maithripala Sirisena has unnerved China with his re-examination of certain projects that Chinahas invested in, including a $1.5 billion "port city" project in Colombo.
EU energy chief Maros Sefcovic invited Russian Energy Minister Alexander Novak and his Ukrainian counterpart Volodymyr Demchyshyn for talks