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| Youssef Boutros-Ghali: deficit is big, but healthy |
The economy is expected to grow 6.2% this fiscal year, according to a recent government report, while the annualized inflation rate is just over 12%. The inflation rate has more than trebled since the end of 2005. But finance minister Youssef Boutros-Ghali says that the figures do not mean that the economy is overheating and adds that he expects the inflation rate to fall to between 8% and 9% next year.
Speaking last month at Euromoney’s Egypt investors conference, the minister admitted that the high inflation rate was "partly self-inflicted". He claimed that one-off shocks, such as a 40% adjustment in energy prices last year, contributed to the present level. However, Boutros-Ghali reckoned that the situation was under control. Last year the central bank embarked on a tightening of monetary policy, and in February the ministry of trade and industry announced a significant cut in customs duties. The average import tariff was cut by 25% to 6.5%.
The minister also dispelled concerns about the level of the country’s fiscal deficit, which last year hit 8.6%