CAIRO: Egypt’s Cabinet approved Wednesday an additional 22.3 billion Egyptian pounds ($3.19 billion) in investment projects to boost the economy over the coming 10 months, Deputy Prime Minister Ziad Bahaeddine said.
Despite the new spending, the government aims to reduce the budget deficit to 9 percent of gross domestic product in the fiscal year to end-June 2014 from 14 percent last year, Finance Minister Ahmad Galal said.
This it would do by streamlining spending, especially on energy subsidies, Galal said.
The two ministers were speaking to reporters after a Cabinet meeting.
Egypt may receive more aid from Gulf countries which have already pledged billions of dollars to the North African nation since July, a senior official from the Finance Ministry said.
“We’re seeing signs of further financial support from Gulf countries in the near future,” Samy Khallaf, head of debt management at the ministry, said in a phone interview Wednesday from Cairo. The expectation is for aid that is on top of what has already been committed, he added.
Egypt, where political turmoil has prompted the military to seize power twice in the last three years, got $5 billion in July out of the $12 billion promised by Saudi Arabia, United Arab Emirates and Kuwait. The funds helped replenish the country’s foreign-exchange reserves to $18.9 billion, the highest level in 20 months, and strengthen the Egyptian pound, which has depreciated 11 percent since December.
The Finance Ministry will issue in September local-currency notes with a maturity of 18 months, after canceling similar-maturity debt sales in the government’s fiscal first quarter which started in July. The issuance is part of its plan to raise a record 200 billion Egyptian pounds in the three-month period, according to the ministry.
The sale of notes, which are mainly bought by local banks, is the primary source for funding a budget deficit that swelled to about 14 percent in the 12 months to June, from 10.8 percent a year earlier.
Khallaf, who had resigned in May, resumed his position Aug. 1, without elaborating on the reasons behind his decision.