By Sara Aggour and Menna Zaki
Following the fiscal year (FY) 2014/2015 state budget approval, the Ministry of Planning released a detailed development plan for the year targeting a 14% surge in investment and 3.2% economic growth.
The government has announced that the FY 2014/2015 budget is aiming to decrease the deficit to 10% of GDP, compared to the previous year’s 12% of GDP deficit. The government is also targeting a 90% of GDP foreign and domestic debt.
The report said economic growth declined over the previous three years, falling from 1.8% in FY 2010/2011 to 2.2% in FY 2011/2012 and 2.1% in FY 2012/2013, with economic growth near 1.2% between July and December 2013. The report added that the government is expecting economic growth of 2.2% in FY 2013/2014.
Several Egyptian experts voiced scepticism over the government’s ability to meet the finance ministry’s revised GDP target for the FY 2014/2015 of EGP 2.4tn. This figure represents a 20% increase from EGP 2tn in FY 2013/2014.
The government added that it is aiming to reduce the unemployment rate to 13% during the same year, compared to 13.3% in FY 2013/2014.
The government attributed this slow growth to the decline in several sectors such as tourism, industry and agriculture.
Discussing salaries, the government expected the average annual growth in citizen income to be EGP 100, increasing from EGP 19,200 to EGP 19,300, a monthly increase of EGP 8.3.
Last week, Minister of Finance Hany Kadry Dimian said EGP 207bn will be allocated for wages in the approved budget, up from the EGP 181bn allocated in the FY 2013/2014 budget.
“The wages system in Egypt is closer to randomness than to being organised,” the minister said, adding that “a project for income law will be submitted to the cabinet during the coming period.”
Investments, resources and savings
Providing details on investment, the government is targeting an investments increase to reach EGP 336.9bn. In FY 2013/2014 investments grew by 13.1% and by 14.2% during FY 2012/2013.
The ministerial report said resources of the Egyptian economy are expected to increase during the current fiscal year and reach EGP 1.2tn, compared to EGP 1.9tn in FY 2011/2012.
The report added that foreign resources in Egypt, comprised in commodities and services, are also expected to surge EGP 3.8tn, compared to EGP 407bn in FY 2011/2012.
On savings, the report mentioned that domestic savings are expected to reach 6.8% during FY 2014/2015.
Comparing the value of savings to the targeted value of investments, a gap of some 7.2% would be created during FY 2014/2015, compared to 7% in the previous two years.
Exports and imports
During the current fiscal year, products and service imports are expected to grow by 6.4% to reach EGP 387.3bn in real prices, the report noted. Exports are also expected to inch up by 3.8% to EGP 251.4bn. During FY 2013/2014, imports registered EGP 364bn while exports stood at EGP242.2bn.
The gap between imports and exports is estimated at EGP 135.9bn, increasing by 2.6% compared to the EGP 121.8bn recorded in FY 2013/2014.
Providing details on fighting unemployment, the report indicated that the government aims to provide 18 million job opportunities, of which 550,000 will be created in FY 2014/2015.
Given the political and economic instability that the country has been through in the past three years and an increase in the labour force, unemployment level reached 13.4%, which added to the challenges that face the community.
The current labour market is characterised by a steady increase in labour force, which reached 27.75 million citizens in 2013/2014 and is expected to reach 28.25 million 2014/2015.
As a consequence of deteriorating market conditions, unemployment has increased from 3.4 million citizens in 2011/2012 to 3.6 million in 2012/2013. It is expected to remain the same 2013/2014 due to political and economic instability.
The prevalence of youth unemployment especially between the ages of 15-29 constitutes nearly 69% of the total unemployed. Around 82.5% of the total unemployed population received education and university degrees.
National training programmes have been allocated EGP 215.1m funding in the different ministries that include: Ministry of Agriculture and Land Reclamation, Ministry of Industry and Foreign Trade, Ministry of Transportation, Ministry of Manpower and Ministry of Housing.
The Social Fund for Development Programme aims to provide 250,000 job opportunities, and funding of small projects.
In the industrial sector, a number of projects and technical training programmes will be implemented to support the sector. The development in the agricultural sector is based on the provision of loans to farmers from Agriculture Credit and Development Bank and considering the exemption of previous loans on farmers. Supporting the information technology industry is expected to attract new investments that will help provide direct and indirect job opportunities.
Prior to his election, President Abdel Fattah Al-Sisi promised to decrease unemployment rate to 8% by the FY 2017/2018.