Determined to reform EGYPT is expected to cut its budget deficit to three to four per cent of GDP by 2020-21, down from a deficit of around 12 per cent last year, Minister of Finance Amr Al-Garhi said this week. Speaking during a meeting organised by the American Chamber of Commerce in Cairo (AmCham), Al-Garhi said the government was targeting a deficit of around 10 per cent for the current fiscal year. He pledged to move forward with the government's reform agenda because “it is the right thing to do and what the country needs.” He said the government was aware of the social effects, noting that the depreciation of the currency had affected inflation the most and not the fuel subsidy cuts. In November 2016, the Egyptian authorities floated the pound and cut subsidies on fuel products as part of a reform programme to restructure the economy. “We were receiving grants and support that was blinding us from taking the right decisions,” Al-Garhi said, referring to around $30 billion in Gulf assistance received since 2014. Not getting down to reforms had depleted these funds as well as the country's reserves, he said. Egypt had $36 billion in hard currency reserves in January 2011. “Many people did not believe that we could do both [the floatation and the fuel subsidy cuts],” he told the AmCham audience, adding that there had been massive appreciation of what the authorities had done. This had been reflected in huge demand for the government's recent Eurobond issue, he said. In January, Egypt successfully issued $4 billion in Eurobonds on the global bond market, the largest issuance in Africa. The targets for cutting the budget deficit were doable, the minister said, given steady growth and the right processes. He estimated a growth rate of six per cent of GDP by 2020-21.The economy had suffered a tsunami of adverse circumstances over the past six years and even before that, Al-Garhi said, noting that it would take time to turn it around. He said that he was aware there was still too much red tape, frustrating the economy's need to move at full speed and for Egypt to be competitive on the global market. Egypt exports $18 billion worth of products, compared to $35 billion by Morocco and $160 billion by Turkey. Foreign holdings of Egyptian treasury bills have reached LE53 billion (roughly $3.3 billion), the finance minister said on Sunday. Reclaiming the desert WORK is underway to roll out a 1.5 million feddan desert-reclamation project, Atter Hannoura, chairman and CEO of the Egyptian Countryside Development Company (ECDC), the company mandated with the development of the project, told participants at a recent seminar organised by the Egyptian Centre for Economic Studies. The first phase of the project includes land in Old Farafra, Moghra, West Minya and Toshka. The land will be available for agricultural production, aqua-farming, and logistical and industrial services, as well as housing. The ECDC is a joint stock company set up by the Ministry of Finance, the General Authority for Rehabilitation and Agricultural Development affiliated to the Ministry of agriculture, and the New Urban Cities Authority affiliated to the Ministry of Housing. It aims to build agro-based communities on newly reclaimed land based on a masterplan that prevents ad hoc expansion and settlements on desert land. It also aims to create job opportunities for Egypt's young people, not only in agricultural production but also in logistics, marketing, manufacturing and services. According to Hannoura, there are two different bidding mechanisms for large investors and youth and small farmers. Large investors can bid to reclaim 2,000 feddans of land or more, and they will be responsible for infrastructural work based on guidelines provided by the ECDC. They will be encouraged to engage with young people and small farmers in contract farming. Young people and small farmers bidding for land will be allocated areas close to already inhabited areas and equipped with water wells. They would also be assisted with housing and living facilities and provided with training and technical assistance, Hannoura said.
