Egypt unveils $4.9bn stimulus package
Pound strengthens at CB currency sale
CAIRO: Egypt’s interim government unveiled its second stimulus package yesterday, which will inject 33.9 billion Egyptian pounds ($4.87 billion) into the economy, with most of that money coming from aid pledged by the United Arab Emirates. Previously the finance ministry said Egypt planned to spend around 30 billion Egyptian pounds. The first stimulus package, amounting to 30 billion pounds, was launched in August. Ahmed Galal, the finance minister, said in a statement yesterday that the new spending would be financed mostly by the United Arab Emirates, one of the Gulf Arab countries that has pledged billions of dollars in support for Egypt.
Three years of political unrest since a popular uprising ousted Egyptian President Hosni Mubarak have scared away investors and tourists, weighing on economic growth. The army toppled Islamist President Mohammad Morsi in July, triggering unrest. Security forces have killed about 1,000 Morsi supporters and arrested many more in a tough crackdown. Analysts say the army-backed authorities are anxious to get the economy moving to shore up public support and curb the scope for more unrest as the government moves along a political transition plan leading to elections this year.
Nearly 20 billion Egyptian pounds will be spent on development projects and 2 billion pounds would be directed towards developing a corridor around the Suez Canal under the second stimulus package, according to the statement. Twelve billion pounds will go towards financing social programs, including a rise in the minimum wage.
Meanwhile, the Egyptian pound strengthened fractionally at a central bank foreign currency sale yesterday and was stable on the black market. The central bank sold $38.6 million to banks with a cut-off price of 6.9514 pounds to the dollar, compared with 6.9515 at the last auction on Thursday. The bank had offered to sell up to $40 million.
On the black market, a participant said the dollar was changing hands at 7.30/33 pounds, unchanged from last week. The pound has been under pressure during three years of political turmoil in Egypt. Foreign currency reserves stood at $17 billion in December, down from $36 billion on the eve of the uprising that led to president Hosni Mubarak’s downfall in 2011.
The central bank introduced dollar currency sales a year ago. Last month it held a $1.5 billion exceptional auction, its largest ever, to restock the market with dollars and curb the unofficial currency market. — Reuters