Egypt's deficit hits 7.1% of GDP in first nine months of current fiscal year

Ahram Online, Wednesday 30 Apr 2014

Higher tax revenues and Gulf aid counterbalance state stimulus spending, according to latest report from the finance ministry

Finance ministry
Cairo's headquarters of the Egyptian ministry of finance (Photo: Al-Ahram)

Egypt's budget deficit reached 7.1 percent of its gross domestic product (GDP) in the first nine months of the current fiscal year, compared to 10 percent recorded in the same period in FY2012/2013, according the finance ministry's monthly report for April.

The deficit totalled some LE145 billion ($20.7 billion) for the period of July 2013 to March 2014, compared to around LE176 billion ($25.1 billion) in the same months of the preceding fiscal year.

"This decrease comes on the back of aid from the Gulf, rather than any restructuring of the economy" Walaa Hazem, fund manager at HC Securities, told Ahram Online.

Egypt received $12 billion (LE83.7 billion) in financial aid from neighbouring Gulf nations from July 2013 until January 2014, of which $4 billion 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 LE283 billion ($40.4 billion), compared to approximately LE208 billion ($29.7 billion) in the first nine months of the previous year, with taxes contributing LE169 billion ($24.1 billion) of the total, or 60 percent, compared to LE156 billion ($22.3 billion), or 75 percent.

Meanwhile, state expenditure increased to LE423 billion ($60.4 billion), from LE382 billion ($54.5 billion) in July 2012 to March 2013, with wages and compensations accounting for 29 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 billion ($7 billion), accounting for Egyptian General Petroleum Company's (EGPC) revenues and Gulf petroleum aid. 

Egypt's total domestic debt stands at LE1.5 trillion ($214 billion) as of December 2013, or 75.4 percent of GDP, compared to LE1.2 trillion ($171 billion) in December 2012, or 73.8 percent of GDP.

External debt stands 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.

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