Global General

Egypt says will not need IMF, World Bank funds

(Agencies)
Updated: 2011-06-25 19:18

Protesters who rallied against Mubarak demanded political freedoms and an end to what they saw as a system of rule from which a rich elite benefited at the expense of the poor.

On the budget plans, Radwan said: "The programme is our programme, so there is no conditionality (from others). It is just a changed programme."

Asked whether Egypt might return to the international markets with a new Eurobond, he said: "I don't rule out anything. Once the budget is approved, finalised, then I start looking at the details about the financing."  

In the latest budget, the government sees spending up 14.7 percent at 490.6 billion pounds in the 12 months starting in July, down from an estimate of 514.5 billion pounds given when a draft budget was shown to the media on June 1.

Radwan said the budget had partly been reduced by raising income tax from a 20 percent flat rate to 25 percent on firms and individuals earning more than 10 million pounds. Profits above that figure would be taxed in the new band.

"I consulted with the business community, and they said they are willing to pay that. That is why I didn't raise it to more than 25 percent, because beyond that we would be back to where we were before (several years ago) when income tax was 40 percent and there was very little tax collection," he said.

Cigarette tax would rise to 50 percent from 40 percent.

"Then we started opening the subsidies file. We are not, repeat not, touching subsides on food or butagaz for the poor," he said, adding fuel subsidies for industries and others would be reduced.

Egypt's subsidy bill had been running at about 137 billion pounds with about 99 billion pounds of that spent on fuel subsidies, he said without giving the period. He said the fuel subsidy bill would now be reduced by 7.5 billion pounds.

In a bid to help industry cope with the change, he said the government would help brick-making factories switch from diesel to natural gas and would then remove the fuel subsidy.

Extra revenue would also come from revising gas export prices, he said adding such revisions had already been agreed with Jordan and Spain. Egypt also exports to Israel.

He said the military council had to approve the new draft budget, but did not foresee any hitch.