Egypt launches multi-billion dollar stimulus plan

Seeking to pull Egypt out of a critical financial slump, the government has launched a multi-billion dollar stimulus plan to lighten the burden of Egyptians hit by soaring prices of goods and services.
The interim government has allocated USD22 billion for the plan to be implemented within six or seven months, Finance Minister Ahmed Galal said today.
It will start new projects, provide basic commodities, guarantee necessary fuel and food, and ensure citizens' access to goods and services.
The plan seeks to reduce the price of basic food items at state-owned outlets by 10 to 15 per cent, as high inflation rates rose to 0.7 per cent.

It will be partially funded by USD12 billion in aid from Gulf states, as already USD6 billion worth of grants had been pumped into the general budget, Galal said.
The government has recently offered the zero coupon bonds to bolster the cash reserves in the Central Bank of Egypt, after it returned the Qatari USD2 billion deposit, he said.

However, experts have criticised the stimulus plan. "Its nonsense and not scientific," said Bassant Fahmy, a banking expert, criticising the stimulus plan.
Fahmy explained that the government did not disclose the real fund of the stimulus plan, as she believes that "deposits" and "Gulf aid" are still debt and could never belong to the state's coffers.

She said that those funds would be more beneficial to Egypt in the form of investments or in providing liquidity.
"To kick off an economic promotional plan, the government should independently fund it, but now we are living through an economic malaise," Fahmy noted.
However, Magdy Toulba, an economic expert said despite that Egypt passing through hard times and that all plans are welcome to pull Egypt out of the slump, Toulba believes it is difficult to implement this plan because Egypt is already suffering a critical financial deficit.