No amendments to Egypt's budget, IMF loan still undecided, nominated finance minister

Ahram Online, Saturday 3 Dec 2011

Egypt's nominated finance minister says the government will do its best to attend to labour demands but will not make promises it cannot uphold

Momtaz El-Said says he will not make promises he can not uphold

Egypt's nominated finance minister released a statement Saturday saying that the government will do "its best" to attend to labour demands that have sprung to the fore across the country in recent months.

Momtaz El-Said, who is yet to be sworn in, said that any surpluses in the government budget would be directed towards appeasing public demands and improving living conditions of the population. He added that he will work towards granting permanent contracts to temporary public workers.

El-Said's statements may seem optimistic as the budget deficit in financial year 2011/12 is set to reach LE133 billion ($22 billion), which represents 8.6 per cent of gross domestic product (GDP). 

El-Said, who was second-in-command at the Ministry of Finance before the latest cabinet reshuffle, said he does not intend to modify this year's general budget substantially.

He added that he will base his policy on transparency, saying that the ministry "will not make promises it cannot uphold".

As for setting a wage cap, El-Said said it is expected within the coming month or two. He added that he plans to build on the work of the previous administration and complete what it didn’t have time to finish.  

In October, Egypt approved a new monthly minimum wage of LE700 ($120) for the private sector effective January 2012. A wage cap was said to be under study.

El-Said, who was also appointed in the Central Bank's board last week, said that it is too early to determine the fate of the $3.2 billion IMF loan deal that Egypt rejected in June, but started renegotiating in November.

Foreign borrowing seems to be a choice of last resort for the government which had been milking the domestic market for debt over the past 10 months. Only last week, the Ministry of Finance sold one-year notes at a record yield of 14.932 per cent while the average yield on six-month notes jumped to 14.4 per cent.

Short link: