CAIRO: The Egyptian government may propose a new stimulus package to boost domestic demand should global economic developments slow growth at home, the official news agency quoted a minister as saying on Tuesday.
The stimulus, which would be adopted in the fiscal year that ends on June 30, would be similar to measures taken by the government early in the global downturn, Minister of Economic Development Osman Mohamed Osman told MENA.
The financial crisis that began in 2008 reduced Egypt’s Suez Canal revenue, foreign investment, tourism and remittances from Egyptians living abroad, lopping more than two percentage points off growth.
Osman said the repercussions of the financial crisis were continuing to hurt global economic growth in both advanced and emerging markets, MENA reported.
In its daily market report, Cairo-based investment bank Beltone Financial said, “With the current recovery in growth, it is unlikely that the government will introduce a further fiscal stimulus, however in line with the minister’s statement we believe that should the need for a further stimulus arises, the government is likely to interfere to support domestic demand.”
The package would be the fourth adopted by Egypt since the global crisis started.
The first stimulus, introduced in October 2008, was for LE 15 billion ($2.6 billion). The second, included in the June 2009/10 budget, was for LE 8 billion and the third for LE 11.2 billion.
Egypt last week cut its gross domestic product (GDP) growth figure for the 2009/10 fiscal year to 5.1 percent from a previously stated 5.3 percent.
Growth in 2008/09 dropped to 4.7 percent from 7.2 percent in 2007/08.
The government said last month it expected the economy to grow by at least 6 percent this fiscal year.
In a newspaper interview published last month, Prime Minister Ahmed Nazif said Egypt did not need a new stimulus package "as the economic indicators show that the Egyptian economy is advancing by firm steps from one quarter to another."
Beltone forecast Egypt’s fiscal deficit to narrow down in 2010/11 to around 7.9 percent of GDP, “benefiting from fiscal reform policies, most notably the effect of the new property tax which should be witnessed during the current fiscal year, since it should fuel revenue growth.” –With additional reporting by Daily News Egypt.