Egypt's new economic ministers prioritise IMF deal, Islamic finance
Finance Minister Fayad Abdel-Moneim and Planning Minister Amr Darrag stress IMF-mandated economic reform aimed at reducing the budget deficit is an immediate priority
Ahram Online, Wednesday 8 May 2013
Minister of Investment Yehia Hamed with PM Hisham Qandil (Photo: Ahram)
Egypt’s newly-appointed economy ministers highlighted the importance of continuing the efforts exerted by their predecessors to ensure Egypt’s economic future in their first public statements on Wednesday.
The finance ministry’s highest priorities over the coming period will be to complete negotiations with the International Monetary Fund over an economic reform plan required to secure a $4.8 billion loan, said Egypt’s new Minister of Finance Fayad Abdel-Moneim.
Minister of Planning and International Cooperation Amr Darrag also told reporters in his first press conference on Wednesday that obtaining the loan was among his foremost duties, because it would signal that Egypt’s government is on the right track regarding the country’s economy.
Darrag will take over the bulk of the responsibility of negotiating Egypt's loan agreement with the International Monetary Fund, which is expected to be finalised by the end of May.
Abdel-Moneim, who pledged to continue with the policies in place at the ministry as part of the economic plan previously set by Prime Minister Hisham Qandil, added that at the top of his to-do list was securing the approval for the state budget from Egypt’s upper house of parliament, the Shura Council, and the passage of amendments to the taxation laws currently debated in the council.
In April, the ministry of finance handed the Shura Council the draft budget for the fiscal year 2013/14 (beginning on 1 July 2013) that includes a projected deficit of LE197.5 billion.
Last week, the Shura Council postponed debating a new income tax law, citing insufficient information on the potential effects of the law from the finance ministry.
The new tax legislation is needed to meet the conditions for the IMF loan.
Darrag said that reducing the budget deficit to 9.5 percent of the GDP is among the challenges currently facing the government.
The 2013/14 budget deficit is around 7 percent higher than the revised figure for the current 2012/13 fiscal year, which is forecast to reach LE185 billion by 30 June.
The cabinet should work hard to boost the country's net international reserves to reach at least $20 billion in the coming period, according to Darrag.
Egypt's foreign currency reserves currently stand at $14.4 billion. The reserves have plunged by more than half since the January 2011 uprising, when they stood at around $36 billion.
Abdel-Moneim, who has a doctorate in Islamic banking and was an economy professor at Al-Azhar University before becoming minister, stressed his eagerness to start issuing sovereign Islamic bonds to finance public projects, which he described as an important addition to the range of financial instruments on offer, as a significant segment of investors prefer equity to debt instruments.
The new finance minister also stressed the importance of implementing a maximum wage for government employees, which will be 35 times as high as the minimum wage.
Since the January uprising in 2011, successive interim governments have promised to impose wage caps to meet one of the key demands of the revolution, social justice.
In June 2011, Egypt's then transitional government granted public servants a monthly minimum wage of LE700 ($120).
The minimum wage was supposed to come into effect at the start of July, the beginning of the 2011-2012 financial year, but was only implemented for government employees on permanent contracts.