Egypt Seeks to Trim Budget Deficit to 8% by 5 Years: Finance Minister

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The Egyptian government is planning to trim its budget deficit to 8 percent of gross domestic product in five years by restructuring energy subsidies, the country’s finance minister said on Tuesday.

“Gradual” fiscal reforms relating to taxation and controlling ineffective spending on subsidies will also push public debt down to 80-85 percent by the 2016/7 fiscal year, Hany Qadry Demian said, Al-Ahram’s Arabic news website reported.

In July, the government raised the price of state-subsidised fuels by as much as 78 percent in an effort to cut EGP 44 billion out of its annual energy subsidy bill, while raising the prices of commercial and household electricity.

Budget deficit has grown from 8.1 percent of GDP in 2009/10 to 12.6 percent in the 2013/14 fiscal year which ended in June. The government forecasts a 10 percent deficit in 2014/15, according to the state budget.

Economic growth is also slated to reach 6 percent in the “medium term” as “mega-developmental projects” and tax reform will boost economic activity, Demian said. This growth figure was cited before by Demian as the target for the 2018/19 fiscal year.

The Egyptian economy slowed down following a popular uprising that led to the ouster of former president Hosni Mubarak in 2011, posting a growth rate of 2.2 percent for 2013/14.

Source: Ahram Online