Egyptian govt pledges LE22 bln stimulus for infrastructure projects

Egypt's interim government plans to invest billions of dollars in infrastructure projects, including housing and transport, to revive the country's battered economy.

The government, which plans to pump some LE22 billion ($3.19 billion) into the economy as part of a stimulus package in the current fiscal year, said in a cabinet statement on Thursday that it expects unemployment to drop to 9 percent by next June through the creation of 800,000 jobs.

Egypt’s jobless rate climbed to 13.2 percent in the first quarter of 2013 according to state-run statistics body CAPMAS, though the actual unemployment rate is believed to be much higher.

The government is also targeting a GDP growth rate of 3.5 percent by the end of the fiscal year.

The Egyptian economy grew by 2.2 percent in the fourth quarter of the 2012/13 fiscal year which ended on 30 June, said Minister of Planning Ashraf El-Araby on Tuesday, with average growth for the entire 2012/13 fiscal year estimated to have reached around 2.3 percent.

Despite the stimulus spending, the government is expecting Egypt's budget deficit, which has mushroomed to 14 percent of GDP, to shrink to 9 percent in the coming nine months.

The expenditure will be funded by foreign aid, including some $14 billion pledged by oil-rich Gulf nations Saudi Arabi, the United Arab Emirates, and Kuwait since July. The figure includes a recent pledge of $2 billion made on 3 September by the UAE. Savings from the previous fiscal year will also go towards supporting the stimulus, the government said.

The investments will focus on labour-intensive infrastructure projects aimed at improving housing, utilities, public transport, and getting the country's manufacturers back on their feet after over two and half years of turmoil.