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Wed 15 Dec 2010 04:27 PM

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Egypt to let state workers borrow to boost economy

Under the programme, employees will be able to borrow up to 25% of their salaries as of Jan 1

Egypt to let state workers borrow to boost economy
EGYPT MOVE: Egypt will let 6 million state employees borrow against their salaries in a move designed to stimulate the economy (Getty Images)

Egypt will let 6 million state

employees borrow against their salaries in a move designed to

stimulate the economy, Al Akhbar newspaper reported on

Wednesday, citing an unnamed Ministry of Finance official.

Under the programme, employees will be able to borrow up to

25 percent of their salaries as of January 1 in loans that must be

repaid within seven years.

"The programme is a tool used by the ministry to limit the

relative slowdown that has hit the markets in general. It will

have a direct effect on inflation," the newspaper quoted the

official as saying.

"It is one of a series of stimulus measures aimed at

boosting economic activity linked to consumption and the retail

sector."

After three years of around 7 percent growth, Egypt's

economy slowed when the global financial crisis hit to 4.7

percent in the 2008-2009 fiscal year, before quickening to 5.1

percent in 2009-2010.

The government believes it needs a minimum of 6 percent

growth to absorb new entrants to the labour force.

The Finance Ministry has contracted with National Bank of

Egypt, Banque du Caire and Alexbank, which

is controlled by the Italian bank Intesa Sanpaolo,

to provide the finance using the employees' salaries as

security, Al Akhbar said.

Finance Minister Youssef Boutros Ghali said on Monday he

expected the economy to grow by 7 percent in the financial year

beginning in July 2011 and by 8 to 8.5 percent the year after.

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