Egypt’s PM to put economic focus on growth, deficit cut

Egypt’s new prime minister said on Sunday he was finalising an economic reform plan that would rein in hefty subsidies and said the economy is expected to grow in the current financial year by 3 to 4 percent or more if investment goals are achieved.Hisham Kandil told Reuters in a rare interview that the government aims to cut the budget deficit, now running at about 8 percent of gross domestic product, by 1 percentage point in two years although he said that target was “dynamic”.Egypt has been on the ropes since foreign investors and tourists, two vital cash streams, fled after the uprising that toppled Hosni Mubarak last year. The revolt gave Egypt its first freely elected president, Mohamed Mursi, who appointed Kandil in July.Once a darling of frontier market investors with growth of about 7 percent a year, the economy has sputtered along, growing just 2 percent in the financial year that ended in June.Determined to draw in investors who want to see hefty cuts in fuel subsidies and other reforms, Kandil’s cabinet also has to sell economic restructuring to Egypt’s 83 million people, many in dire poverty and desperate to see the benefits of the revolt.“For this year, we hope that we will get around 3 to 4 percent (growth) and after that we will jump to 4, and then 4-5, and hopefully in a few years we will come to 7 percent,” the 49-year-old said, adding Egypt could hit 7 percent in four years.Kandil said his government was finalising its economic reform programme and the draft would be reviewed next week with President Mursi, Egypt’s first civilian president who was propelled to power by the once banned Muslim Brotherhood.Kandil said the government wants to make fuel and other subsidies more targeted and a coupon or smart card system to ensure the poor, rather than everyone, received subsidised butane cooking gas was expected to start in October.