Egypt's growth seen at 7 per cent next year

Reuters, Monday 13 Dec 2010

Egypt economy to grow by 7 per cent in the next financial year and is expected to reach 8-8.5 per cent in the year after

Ghali 1
Youssef Boutros Ghali is trying to convince Egyptians that the economy is booming.

Egypt's finance minister said on Monday he expected the economy to grow by 7 per cent in the financial year from July 2011, and by 8-8.5 per cent the year after, up from 5.1 per cent in the year that ended on 30 June 2010.

Finance Minister Youssef Boutros Ghali said the budget deficit goal for this year was 7.9 per cent of gross domestic product, but that a deficit of 7.5 per cent was likely.

He said he expected a budget deficit of 6.5 per cent of GDP in 2011-12.

"We have an economy that still managed ... to generate a growth rate last year of 5.2 per cent. This year we will be 6 per cent, God willing," Boutros Ghali told a news conference.

"Next year we will cruise at 7 per cent, after that 8 to 8.5."

Growth edged above 7 per cent a year before the global financial crisis but then dipped back to about 5 per cent. Analysts say Egypt's economy needs to expand by 6 per cent or more a year to create jobs for its growing population.

The financial crisis also pushed up Egypt's budget deficit as key revenue earners such as Suez canal and tourism were hit. The government also sought to stimulate growth with extra spending on infrastructure and other public works.

"Our deficit target this year is 7.9 per cent, but ... likely the outcome will be 7.5," Boutros Ghali said.

"Next year, we plan for 6.5 per cent of GDP."

He noted that this would bring the budget deficit to the same level as before the start of the crisis in 2008.

A new tax regime helped Egypt's budget deficit in the fiscal year June 2010 to be narrower than first thought, at 8.1 per cent of GDP, the finance ministry said in October.

Egypt's financial year runs from July 1 to June 30.

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