PM tells Egyptians austerity needed to help economy

The prime minister told Egyptians on Sunday that the economic situation was worse than anyone imagined and that there was a need for austerity to rein in the burgeoning budget deficit.   

Kamal al-Ganzouri, 78, also said in a news conference live on state television that re-establishing security would be a priority for the "national salvation government" that he unveiled last week.  

 "The economic situation is worse than anyone imagines," he said, describing what he said were policy failings during the last decade of ousted President Hosni Mubarak's rule.    Ganzouri said the government would not agree to a $3.2 billion facility from the International Monetary Fund (IMF) until the outlook for the budget was clearer.   

"If we are forced to resort to the IMF, we will resort to it. This is a matter open for discussion," he said, echoing comments by a general from the ruling army council who had said Egypt would only go to the IMF  in "extreme need".   

Egypt negotiated the facility with the IMF this year but turned it down in the summer and has since sent mixed signals over whether it will take it.   

"To save 20 billion (Egyptian pounds) there has to be austerity, but in sectors that we feel do not affect the Egyptian citizen. I want to reduce this (budget deficit), because the deficit remaining as it is means there will be inflation," he said.  

Reuters