Finance minister hopes to grow foreign reserves by mid-year

Finance minister hopes to grow foreign reserves by mid-year

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Wed, 02/01/2013 - 14:00

As the value of the pound falls and the country struggles to deal with a foreign currency shortfall, Planning and International Cooperation Minister Ashraf al-Araby said Wednesday that the government hopes to increase foreign reserves from US$15 billion to $19 billion by the end of June.

The minister, who announced the goal during a community dialogue session at the Economic Research Forum, did not specify how the government would increase foreign reserves by $4 billion as part of efforts to restore the economy. The talks are part of a national initiative for economic consensus put forth by the government several days ago.

The Central Bank of Egypt announced Saturday that foreign reserves were critically low and introduced a new regime including regular currency auctions that allowed the pound to slip to an all-time low of 6.3 to the US dollar Sunday.

According to the CBE, reserves are at the lowest level needed to meet international debt requirements. Economic experts say the just over $15 billion in reserves barely cover three months of imports, thus compromising the country's ability to supply the consumer market with vital commodities.

Government sources said Wednesday that reserves would be strengthened by a $4.8 billion loan from the International Monetary Fund expected to be finalized in January, and a $500 million loan from Turkey, in addition to increasing tourism and foreign investment.

Araby said that the government has made​​ short, medium and long-term plans to address the country's economic crisis and ballooning state budget deficit, which had increased to 11 percent of GDP by mid-2012.

The government plans to reduce the budget deficit to 10.4 percent in the current fiscal year 2012/2013, and then to 8.5 percent in the next fiscal year, which begins in July.

The government also hopes to double national revenue over the next 10 years, according to Araby. This requires the increase of investment from 15 percent to 22 percent of the Gross National Product (GNP) by 2017, and to 30 percent by 2022, he said.

The government is also targeting a 7 percent growth rate to be reached over the next 10 years. The growth rate was 2.5 percent in 2012, the second year of political unrest and uncertainty following the 2011 revolution.  

The state will also endeavor to reduce unemployment from around 13 percent to less than 6 percent over the next 10 years, Araby said.

Edited translation from MENA