Preparing Egyptians for austerity, Sisi cuts own pay

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(Reuters) by Lin Noueihed - Egypt's new president pledged on Tuesday to give up half his salary and property and called on the Egyptian people to make similar sacrifices, trying to prepare the public for a period of painful economic austerity.

In an impromptu speech at a military graduation ceremony, Abdel Fattah al-Sisi said he had refused to sign off on a 2014/15 budget proposal following lengthy discussions this week because it was too dependent on ballooning borrowing.

"We said we would revise this budget because I cannot bear to accept it when it contains this level of deficit," he said.

"I want to think of the children that are coming and to leave them something good, but this way we will leave them nothing. If the debt keeps accumulating like this, we won't leave them anything good."

The comments appeared designed to prepare public opinion for further austerity measures, such as subsidy reductions, to allow for deeper reforms of the ailing economy.

Egypt's budget deficit reached 14 percent of economic output in the last fiscal year, which ended in June 2013 and the economy is forecast to grow just 3.2 percent in the fiscal year that begins on July 1.

That is well below the level needed to create jobs for its rapidly growing population of 86 million and alleviate poverty.

The turmoil of the past three years, in which two presidents have been overthrown and hundreds of people have been killed in the streets, have battered tourism and investment, worsening a huge unemployment problem and pushing up the deficit.

Egypt's finance minister, Hani Kadry, said in a television interview late on Tuesday he expected the new budget deficit to stand at 10 percent in the coming fiscal year, down from the initial proposal to keep it at this year's 12 percent.

His ministry issued a statement later saying it would revise the budget on Wednesday and re-send it to Sisi.

The government will also have to tackle the legacy of decades of corruption and red tape and a costly subsidy system - food and fuel subsidies alone consume about a quarter of total government spending.