Egypt’s Deficit Hits 8% in Year Ending April 2014

By Yomna Yasser On May 31, 2014

Egypt’s budget deficit reached 8 percent of its gross domestic product (GDP) in the first 10 months of the current fiscal year, compared to 10.5 percent recorded in the same period in FY2012/2013, according the finance ministry’s monthly report for April.

The deficit totalled some LE163.3 billion ($22.8 billion) for the period of July 2013 to April 2014, compared to around LE184.8 billion ($25.8 billion) in the same months of the preceding fiscal year.

Analysts attribute the decline in budget deficit to aid received from Gulf countries at the beginning of the current fiscal year.

Egypt received $12 billion (LE83.7 billion) in financial aid from neighbouring Gulf nations from July 2013 until January 2014, $4 billion of which was in petroleum aid and $2 billion in grants.

The present interim government has said it is aiming to contain the deficit to between 11 and 12 percent by the end of the current fiscal year in June.

Revenues amounted to some LE315 billion ($44 billion), compared to approximately LE240 billion ($33.5 billion) in the first 10 months of the previous year, with taxes contributing LE195 billion ($27.3 billion) of the total, or 62 percent, compared to LE177 billion ($24.7 billion), or 73.7 percent.

Meanwhile, state expenditure increased to LE471 billion ($65.8 billion), up from LE323 billion ($45.2 billion) in July 2012 to April 2013, with wages and compensations accounting for 29.5 percent of spending, slightly up from the same period of the previous year’s 27 percent.

Egypt’s government has enacted two stimulus packages worth a total of LE60 billion ($8.6 billion) since Islamist president Mohamed Morsi’s ouster last summer, including the introduction in January of a new public sector minimum wage with an estimated cost of LE18 billion ($2.6 billion) a year.

Fuel subsidies totalled LE49.8 billion ($7 billion), down from LE74.4 billion, accounting for Egyptian General Petroleum Company’s (EGPC) revenues and Gulf petroleum aid.

Egypt’s total domestic debt remains at LE1.5 trillion ($214 billion) as of December 2013, or 75.9 percent of GDP, compared to LE1.2 trillion ($171 billion) in December 2012, or 73.8 percent of GDP.

External debt also remained unchanged at LE45.7 billion ($6.5 billion) as of December 2013, or 15.5 percent of GDP, compared to LE38.8 billion ($5.6 billion) in December 2012, or 14 percent of GDP.

Source: Ahram Online