Finance Minister Youssef Boutros Ghali has announced a LE20 billion stimulus package – the third such package since the beginning of the 2008 world economic crisis. This package will be financed by the commercial banks under the supervision of ministry of finance.
The new stimulus is intended to boost local demand by targeting the wide base of civil servants. The stimulus plan will grant small loans to the civil servants and the public sector employees. The ministry will guarantee the loans so as to reduce the risk and encourage the banking sector, the minister said yesterday during the opening of the new headquarters of Alexandria SaoPaulo Bank.
The package will be aimed at the real estate sector and durable goods which would boost investment spending and increase the local demand, argues Minister Ghaly, who also added that this third stimulus package, unlike previous ones, will not add any pressure on the state budget since it will only be financed by the banking sector.
The ministry has already reached an agreement with the Bank of Alexandria to be a partner in the new stimulus packages and is now negotiating with other local banks. No other responses from the banking sector were announced since the unveiling of the plan on 9 November.
In order to finance the two previous stimulus packages Egypt had to allow the budget deficit to widen by LE15 and LE10 billion, used to finance infrastructure projects. In the financial year of 2009-2010, the deficit stood at 8.1 per cent.