Abu Dhabi–Egypt's food subsidy bill is expected to be on the high side in 2010/11 with the state spending an extra LE4 billion due to increases in global prices, Egypt's Minister of Trade and Industry Rachid Mohamed Rachid told Reuters on Tuesday.
Egypt, the world's biggest wheat importer, has said that it plans to spend an extra LE2.5 billion to 4 billion in 2010/11 to make up the shortfall after drought-hit Russia banned wheat exports this summer, causing the jump in world prices.
"Half way into the fiscal year…we can see that the subsidy bill is looking be to on the high side, which is 4 billion," Rachid said in an interview during a visit to Abu Dhabi.
"Egypt still imports about 50 percent of its food supplies and we are very concerned about the impact it will have on our budget," he added.
Egypt paid about US$280-290 a ton for wheat from France, Canada and the US in August and September, while in June it paid around US$165 a ton for Russian wheat. In early 2008, Egypt paid US$450-480 a ton for some shipments.
SHIFT TO THE EAST
Around 60 percent of Egypt's exports are to Europe and the US, which put the most populous Arab country at risk as these Western economics are still struggling after the global economic crisis.
"We are looking to diversify our trade partners since there is a slowdown in Europe and the US," said Rachid. "We are looking to increase trade and investment from the Middle East, the Gulf region and Asia."
One of the main challenges for Egypt is to maintain an annual economic growth rate of 6-7 percent, said Rachid. He also said foreign direct investment (FDI) would not be affected by uncertainly over the 2011 presidential election.
"We have been noticing a growth in FDI so for the long-term investments that we always give priority to, things are looking good. Perhaps the short term investments on the stock market will be affected, " he said.
President Hosni Mubarak, 82 and in power since 1981, is expected to seek a sixth term but has not yet said if he will run.