Egypt’s PM de­fends economic mea­sures

Fuel sub­si­dies cut, gaso­line prices hiked

Kuwait Times - - BUSINESS -

CAIRO:

Egypt’s prime min­is­ter yes­ter­day tried to re­as­sure anx­ious Egyp­tians af­ter the Cen­tral Bank’s un­prece­dented de­ci­sion the pre­vi­ous day to de­value the na­tional cur­rency by 48 per­cent before al­low­ing it to float.

Sherif Is­mail pledged that steps would also be taken to­ward “im­prov­ing the cit­i­zens’ liv­ing con­di­tions” and in­sisted that while past mea­sures were only tem­po­rary “pain re­liefs,” the lat­est dras­tic moves were part of a com­pre­hen­sive re­form pro­gram.

Thurs­day’s de­val­u­a­tion of the pound was meant to meet con­di­tions set by the In­ter­na­tional Mone­tary Fund for a much-needed $12 bil­lion bailout. Egypt also an­nounced cuts in fuel sub­si­dies, along with a hike in gaso­line prices be­tween 30 per­cent and 46.8 per­cent.

The surge in fuel price trig­gered con­cerns of a far-reach­ing knock-on ef­fect, with sim­i­lar in­creases in food and trans­porta­tion prices. Word of Thurs­day’s hikes was leaked late at night, spark­ing a rush by mo­torists to gas sta­tions, where long lines of ve­hi­cles formed across much of the coun­try.

Is­mail said the mea­sures are nec­es­sary and that “it’s our des­tiny to take action in the face of the cur­rent economic sit­u­a­tion.” The gov­ern­ment aims to achieve a growth rate no less than 6 per­cent, he said, com­pared the cur­rent rate of around 4.3 per­cent. It also seeks to de­crease the bud­get deficit from 12 to 10 per­cent, Is­mail added.

He warned that public debt is inch­ing closer to 100 per­cent of the GDP, adding that the way for­ward is to at­tract for­eign in­vest­ment by im­prov­ing in­vest­ment con­di­tions to pro­vide more job op­por­tu­ni­ties and in­crease ex­ports. Egypt cur­rently im­ports a third of its needs in goods. “We want to move for­ward,” he said, adding that economic re­form will go hand-in-hand with so­cial pro­tec­tion, in­clud­ing tighter con­trol over food prices. “Re­form comes at a cost,” he said. “At the end, it will serve the cit­i­zens’ in­ter­est.” Is­mail cited 1977 bread riots over aus­ter­ity mea­sures in­tro­duced by for­mer Egyp­tian Pres­i­dent An­war Sa­dat, who de­ployed the army to put down riots against lift­ing of sub­sides. Sa­dat ended up can­celling the aus­ter­ity mea­sures. This, the prime min­is­ter said, led to an ac­cu­mu­la­tion of bud­get deficits since sub­si­dies eat up a big chunk of the state bud­get. —AP

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