By Lin Noueihed

CAIRO, June 24 (Reuters) - 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, in a bid 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 ready 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 enough jobs for its rapidly growing population of 86 million and alleviate widespread poverty.

The turmoil of the last 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.

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.

HALF PAY

Over the past two years, Egypt has depended on aid from wealthy Gulf Arab allies who sent more than $20 billion worth of grants, loans and petroleum products, according to numbers given by Sisi during his election campaign.

The aid has kept the Egyptian economy from sinking but Sisi said the country could not keep turning to its lenders and donors forever and would have to take difficult cost-cutting measures in order to balance its books.

Speaking in the local dialect of Arabic used by ordinary Egyptians, Sisi proposed to lead by example, giving up some of his own pay and vowing to apply a salary cap for higher earners in the public sector.

"There must be real sacrifices from every Egyptian man and woman. I take the maximum salary of 42,000 pounds ($5,900) and no one will take more than the maximum," he said.

"I am going to do two things: I am not going to take half of this sum and my property, even what I inherited from my father, I will give up half for the sake of our country."

It was not clear what would happen to Sisi's properties.

The president called on Egyptians inside and outside the country to make personal sacrifices for the greater good and said the demands of vested interests or individual factions would no longer be pandered to.

A news flash on state television hours after the speech said an account had been opened at the central bank to collect donations in support of Egypt's economy.

Sisi's comments, and his frank and informal manner, appeared designed to set him apart from Hosni Mubarak, another former military man who was overthrown in 2011 after 30 years in power.

Mubarak's rule was characterised by crony capitalism, stoking public discontent that helped to fuel the uprising.

But his call for Egyptians to tighten their belts may ring hollow to the millions who already struggle with multiple low-paid jobs to make ends meet.

Sisi's message that it was up to ordinary citizens to step up and work hard alienated poorer Egyptians during the election campaign and deterred some on the poverty line from voting.

Successive governments have tried to steer a course between boosting revenues without discouraging investors.

Sisi ousted elected Islamist President Mohamed Mursi last July, following mass protests against his rule.

Though Mursi had failed to win the trust of the Egyptian business community or attract foreign backing, bringing the economy to the edge of bankruptcy, his downfall prompted a wave of violence and protests that only deepened the crisis.

But Sisi's speech is likely to be welcomed by the business community, that has long called forEgypt's economic challenges to take centre stage in policy making.

"The elephant in the room is that historically no one discussed economics in public. At last someone is bringing the economic debate to the public," said Angus Blair, chairman of business and economic forecasting think-tank Signet. ($1 = 7.1501 Egyptian Pounds) (Additional reporting by Shadia Nasralla and Stephen Kalin in Cairo; Editing by Catherine Evans)