Egypt's food subsidy bill is expected to be on the high side in 2010/11 with the state spending an extra LE4 billion due to increases in global prices, Egypt's Minister of Trade and Industry Rachid Mohamed Rachid told Reuters on Tuesday.
Egypt, the world's biggest wheat importer, had said that it plans to spend an extra LE2.5 billion to LE4 billion pounds in 2010/11 to make up the shortfall after drought-hit Russia banned wheat exports this summer, causing the jump in world prices.
"Half way into the fiscal year ... we can see that the subsidy bill is looking be to on the high side, which is LE4 billion," Rachid said in an interview during a visit to Abu Dhabi.
"Egypt still imports about 50 percent of its food supplies and we are very concerned about the impact it will have on our budget," he added.
Egypt paid about $280-$290 a ton for wheat from France, Canada and the United States in August and September, while in June it paid around $165 a ton for some Russian wheat. In early 2008, Egypt paid $450-$480 a tonne for some shipments.
SHIFT TO THE EAST
Around 60 percent of Egypt's exports are to Europe and the United States, which puts the most populous Arab country at risk as these Western economies are still struggling after the global economic crisis.
"We are looking to diversify our trade partners since there is a slowdown in Europe and the U.S.," said Rachid. "We are looking to increase trade and investment from the Middle East, the Gulf region and Asia."
One of the main challenges for Egypt is to maintain an annual economic growth rate of 6-7 percent, said Rachid. He also said foreign direct investment (FDI) would not be affected by uncertainty over the 2011 presidential election.
"We have been noticing a growth in FDI so for the long-term investments that we always give priority to, things are looking good. Perhaps the short term investments in the stock market will be affected, " he said.
President Hosni Mubarak, 82 and in power since 1981, is expected to seek a sixth term but has not yet said if he will run.