Egypt's President Abdel-Fattah El-Sisi on Sunday ratified the amended state budget for the financial year 2014/15, with the deficit forecasted to stand at 10 percent of the country's GDP (LE240 billion) compared to LE243 billion deficit (12 percent of GDP) in the fiscal year 2013/14, Mesbah Qotb, spokesperson at the finance ministry, told Ahram Online.
Last week, El-Sisi refused to ratify the state budget for the 2014-2015 fiscal year on the grounds that the budget deficit – projected at LE292 billion, or 12 percent of GDP – was excessively high.
The budget forecast for the financial year 2014/15* has expenses projected to amount to LE789 billion and revenues at LE549 billion, stated the finance minister on Sunday.
Speaking on private Egyptian satellite channel CBC after El-Sisi's objection to the draft budget last week, Finance Minister Hany Kadry Demian said that the government was working to reign in next year's budget deficit to 10 percent of GDP.
This will be achieved through the introduction of a Value Added Tax (VAT) to replace Egypt's current complex and unjust web of sales taxes, said Demian, a move that is eventually expected to bolster state revenues by LE40 billion.
Energy subsidies will also be subjected to further reform through price hikes and other measures, affirmed Demian, without going into further detail.
Egypt's public finances have long been suffering under a sprawling fuel subsidy programme that consumes 20 percent of public spending every year.
In late 2012, the government liberalised the price of the highest quality gas, octane 95, to be sold at LE5.90 ($0.84) per litre instead of the subsidised price of LE2.75 ($0.39) per litre.
It also raised prices for cement companies that use low-quality mazut for production by 130 percent to reach LE2,300 ( $328) per tonne, compared to the previous price of LE1,000 ($143) per tonne.
In the last two months, official sources have been quoted as saying that the costs of three widely-used forms of petrol – 92 octane, 80 octane and diesel – will be raised by LE0.50 to LE1 per litre.
The ministry of finance will announce details of the new budget in a press conference on Monday.
* The story has been amended by Ahram Online
(The financial year 2013/14 has been changed to 2014/15)