CAIRO: Sisi defended controversial austerity measures including a recent price hike of oil, saying the measures would prevent the country’s ballooning deficit from growing any further in a televised address Monday on the 41st anniversary of Yom Kippur War, the 10th day of Ramadan.
The government spends between 700 and 800million EGP for fuel subsidizes, so the austerity measures are “a must, with no second option,” he said.
Sisi said without the measures, the budget deficit for this fiscal year would have been over 300 billion EGP ($42 billon,) he also noted that the national debt had increased from 1.2 trillion EGP to 1.9 trillion EGP in the past three year.
The government increased fuel prices midnight Saturday between .70 EGP and .75 EGP ($.04-.05) per liter, sparking the anger of many people and taxi drivers; Sisi also issued a decree imposing progressive taxes, wealth taxes and real estate taxes as steps for covering the budget deficit and increasing tax revenue.
The interest rates of the national debt increase by approximately 600 million EGP daily, and the government pays around 600 EGP million in wages for state employees, beside the subsidizing system at around 400 million EGP, Sisi added.
Sisi refused to ratify the first draft of the 2014-15 budget deficit June 25, saying “I cannot ratify such budget that features more than 300 billion EGP in deficit and surges public debts to more than 2 trillion EGP.”
Five days later he approved the second draft of the amended budget of 240 billion EGP, representing ten percent of the gross domestic product (GDP), Reuters reported.
Sisi also announced that Egypt will borrow around 250 billion EGP even after taking these economic measures in addition to receiving Gulf loans.
The free currency resource of tourism has not been available since 2011 and the only resource for free currency is the Suez Canal, Sisi continued, noting that tourism brings Egypt around 14 billion EGP annually.
“These measures should have been taken since 1977 but no one was able to do so, but for the sake of Egypt, I had to take them to reduce the burden on the poor,” he continued.
Many actions have been taken to offer better living conditions such as increasing the minimum wages from 750 EGP to 1,200 in government entities. Also, the private sector took measures to improve employees’ income, the 59-year-old President noted.
The Ministry of Supply took further measures to reduce the negative impact on the poor. The previous system allowed the government to allocate 4,000 EGP in subsidies for the rich compared to 50 EGP for the poor, Sisi said.
Sisi also revealed that the government will build a road network more than 3,000 kilometers long and reclaim 104 acres of land after Ramadan. There are many development and reconstruction campaigns for Egypt to reduce the unemployment rate and increase the poor’s income, he said.
Sisi said he will defend Egypt and will never let it suffer from what he called religious division, which is currently happening in other countries in the Middle East.
More than a year ago, I issued warnings about terrorism…Beware of what is happening in the region,” Sisi said.
Sisi donated money to the “Long Live Egypt” account in the Egyptian Al-Ahly Bank on Monday as an initiative to help the country’s economy.