Egypt new Budget projects 9.9 per cent Deficit, 5 per cent Growth

The Cabinet approved a draft budget for the fiscal year 2015-16 that projects a deficit of 9.9 per cent of gross domestic product, narrowing slightly from an expected gap of 10.8 per cent in the current fiscal year.

The draft, which has yet to be approved by the president, sees a big increase in expenditure on social welfare programmes.

“Achieving social equality and improving the standard of living for those in need is the focal point of this budget,” Finance Minister Hani Qadri Dimian said in a cabinet statement.

The draft budget projects a total of 431 billion Egyptian pounds in expenditure on social programmes, or about 49 per cent of total public expenditure and a 12 per cent increase on the current fiscal year.

Growth was projected at about five per cent versus a projected 4.2 per cent in the fiscal year ending on June 30.

Projected public revenues stand at about 612 billion pounds ($80.26 billion), a 26 per cent increase. Projected expenditure is 885 billion pounds, up 20 per cent.

The budget also earmarks 38.4 billion pounds for bread and commodities subsidies.

The projected deficit of 281 billion pounds compares to 240 billion pounds that was approved in the 2014-15 fiscal year budget.

Political turmoil since the 2011 uprising that ousted Hosni Mubarak has hurt Egypt’s economy and hit investor confidence. The government has been walking a fine line between trying to cut its deficit whilst luring investors and restoring growth.

“The economic situation is witnessing gradual improvement and this is reflected in the increase in growth… and the ratings by international agencies,” Dimian was cited as saying in the cabinet statement. But he also said “responsibility must be borne towards completing economic reforms”.

Cairo has received billions of dollars in grants, loans and petroleum products from Gulf Arab allies, which has proven to be a lifeline for Egypt’s economy but the government is also working on implementing long-awaited reforms.

The draft budget earmarked 2.2 billion pounds in grants.

Egypt introduced painful reforms last July, slashing energy subsidies by 40 billion pounds, which has led to steep rises in the price of fuel and electricity.

Projected revenues from taxes in the current draft budget stood at 422 billion pounds. Spending on public investments stood at 75 billion pounds.

Source: AFP