Egypt’s economy may need a stimulus package to help create jobs, Finance Minister Samir Radwan said today, after President Hosni Mubarak bowed to pressure from hundreds of thousands of protesters and stepped down.
“There is a need for a stimulus package that is very closely related to employment,” Radwan said in a telephone interview from Cairo. The government will run the daily affairs of the country until further instructions from the military council that Mubarak yesterday left in charge, he said.
More than two weeks of unprecedented protests against Mubarak’s three-decade rule left about 300 people dead, according to United Nations estimates. The turmoil hit exports, tourism and raised borrowing costs for the government.
The unrest may slow economic growth in the fiscal year through June to about 4 percent, though “it’s still too early to tell,” Radwan said. Authorities had forecast the economy would expand as much as 6 percent before the crisis. He declined to give a forecast for the budget gap, which widened in the last fiscal year to 8.1 percent of gross domestic product from 6.9 percent in the previous 12 months.
Emergency fiscal measures the government took in the past two weeks didn’t have an impact on the budget deficit, Radwan said. “They were done through savings from the budget,” he said.
About 9 percent of Egyptians were unemployed before the crisis, according to the state-run statistics agency. Unemployment among people between the ages of 20 and 25 was 28 percent in the last quarter of 2008, according to a paper Radwan wrote for the International Labour Organization in April 2009.
Radwan, a former senior economist at the ILO, was named finance minister on Jan. 31 after Mubarak fired the government of Prime Minister Ahmed Nazif in what proved to be a failed attempt to placate the protesters.
Among Radwan’s first actions was creating a 5-billion Egyptian pound ($850-million) fund to compensate people who lost property during the unrest and to pay benefits for those who became unemployed as a result of the crisis.
The government also gave permanent contracts to as many as 600,000 people who were listed as temporary workers, Radwan said. “They basically had no rights,” he said.