Analysts and experts greeted the stimulus programme approved by Egypt’s interim cabinet with some relief and cautious optimism, as they continued to puzzle over how the government planned to balance the equation.

The plan involves pumping an additional LE22.3 billion ($3.2 billion) into investment projects over the coming year, to revive Egypt’s battered economy.

"I have always sincerely believed that a stimulus package is essential to get the economy going again," says former finance minister Samir Radwan, who advocated such a policy when in office in 2011, as the economy reeled in the aftermath of the January revolution which toppled Hosni Mubarak’s regime.

Two and a half years later, with growth having slowed to some 2 percent in the 2012/2013 fiscal year, Radwan told Ahram Online he welcomed the government’s initiative, "even at the risk of increasing the budget deficit, providing that the plan involves spending on investment rather than subsidies and wages."

Egypt’s budget deficit has mushroomed to a whopping 14 percent of GDP in the last year, as ousted president Mohamed Morsi’s government struggled to meet the needs of the Arab world’s most populous nation through 12 months of almost relentless political unrest.

In fact, Radwan even deemed the plan to be "modest in relation to the needs of the country."

"It’s not going to completely turn things around," Mohammad Abu Basha, economist at investment bank EFG-Hermes told Ahram Online, "but at this point it’s definitely better than nothing," he said, adding that the initiative was a "positive" and "welcome" step.

The government plans to invest in labour-intensive infrastructure projects, mainly on road, railways, water and sewage treatment plants, low-income housing and extending natural gas to homes and utilities in industrial areas, especially in Upper Egypt, according to Planning Minister Ashraf El-Araby.

"Infrastructure in a country like Egypt is a good area to invest in because it trickles down to workers in the fields of construction, cement; to suppliers and day workers," says Abu Basha.

"The construction sector is very important to Egypt because it ties into 29 other sectors," explains Radwan.

Through such measures, Egypt is aiming to boost GDP growth from around 2 percent currently to 3.5 percent, while reducing the budget deficit from 14 percent to 9 percent of GDP in the next ten months.

However, it is not entirely clear to commentators how the interim cabinet can honour contradicting pledges to boost growth and trim the budget deficit, without raising taxes or drastically cutting public spending.

Overall, the stimulus plan lacks detail and coherence, says Moustafa Bassiouny, fellow at the Signet Institute, a Cairo-based think tank covering the MENA region.

"It is unclear how exactly the government aims to both stimulate growth through investment and at the same time trim the budget deficit without raising taxes," says Bassiouny. "They are sending mixed messages."

"The question is what will the sources of growth be? Tourism is at a standstill, and the Suez Canal and remittances are fairly stable sources of income," says Radwan.

"Growth will have to come from exports, but in order for that to happen the government needs to re-open the 4,600 companies which have closed since January 2011," explains the former minister.

"It is not very clear where this money is going to come from," says Abu Basha, but [LE 22.3 billion] is not a massive sum, and the government has already been promised $3 billion in grants by the Gulf states.

Almost immediately after the ouster of Islamist president Mohamed Morsi in July, Saudi Arabia, Kuwait and the United Arab Emirates pledged $12 billion to bolster the country’s ailing economy of which Egypt has already received $5 billion.

But the recent injection of funds from the Gulf is not enough to "clarify the arithmetic" behind the government’s plan, maintains Radwan.

"Unless they plan to do away with subsidies, we have yet to find out, in dollars and cents, how the authorities plan to reduce the budget deficit," says Radwan.

State subsidies for food and fuel consumes over a third of public expenditure, amounting to LE146 billion in the fiscal year which ended last June.

Speaking at a news conference after Wednesday’s cabinet meeting, Finance Minister Ahmed Galal announced that energy prices for large investors would be subject to a gradual increase, which would begin before the end of the current year and would be spread over two years.

Yet, in order for the government to meet its deficit target of 9 percent, "GDP would have to grow by about 55 percent, assuming no reduction in spending or increase in taxation," says Bassiouny, a tall order for an economy still in the grips of political uncertainty.

The level of violence which has so far marked Egypt's transitional period following Morsi's ouster compelled interim president to declare a month-long state of emergency and night-time curfew in 14 of the country's governorates on 14 August.