CAIRO: The International Monetary Fund (IMF) has called on Egypt to take measures to cut its budget deficit within the coming fiscal year in order to reassure investors that the government was in fact serious about cutting this deficit in half within the coming half decade period. The IMF statement comes as the Egyptian ministry of investment said the worst of the global economic crisis had subsided and the country expected growth to move back over the five percent mark this year. The Washington-based IMF said on its website last week that by reducing the deficit by 1.5 to 2 percent of gross domestic product next year “would provide an upfront signal to investors that progress toward the medium-term objective is well under way.” Egypt has said it plans to reduce the deficit from a projected 8.4 percent of GDP in the current fiscal year to some 3 percent by 2014-15, Finance Minister Youssef Boutros-Ghali said last year. The IMF said this was possible, but that Cairo must act quickly to ensure the process gets underway. The government said in a statement last week that it plans to focus on reducing the shortfall as economic growth accelerates, though it still expects tax revenue to decline, Bloomberg news agency reported. The economy of the most populous Arab country expanded 4.7 percent in the fiscal year through June, beating IMF forecasts and suprising even the Egyptian ministry, which had predicted the growth to be around three percent. The government expects growth to be above 5 percent this year. Growth remains below the average of 7 percent achieved in the three fiscal years through June 2008, before the global financial recession hit worldwide. The central bank reduced its benchmark interest rate six times in 2009 as inflation and economic expansion slowed. The bank left its overnight deposit rate unchanged in its last three meetings as inflation accelerated to more than 13 percent. BM
