Cairo's headquarters of the Egyptian ministry of finance (Photo: Al-Ahram)
Egypt's state budget deficit hit LE255.4 billion – 12.8 percent of GDP – in the fiscal year 2013/14, according to final figures announced by the finance minister.
Hany Qadry Demian announced on Saturday that the budget deficit in the fiscal year ending on 31 June 2014 did not achieve its initial target as plans for fiscal consolidation did not materialise.
Revenues stood at LE456 billion, 24 percent lower than budgeted, due to overestimates based on unattained procedures, mainly subsidy cuts and tax reform. This was overcome by Gulf aid, said Demian.
Egypt received LE95.8 billion in aid and grants of which LE74 billion came from Saudi Arabia, UAE and Kuwait following the ouster of president Mohamed Morsi on 30 June 2013.
Most of the Gulf aid came in the form of petroleum products, with the cash aid ranging from LE20-LE21 billion.
Revenues from the Suez Canal, central bank and petroleum sector reached LE100.6 billion.
On the other hand, the government spent a total of LE701.5 billion, almost 10 percent lower than budgeted, partially due to savings in wages.
"Several authorities overestimated their wage requirements," Demian said, explaining the 5 percent savings in wage expenditure compared to the budgeted figure.
However, the LE178.5 billion spent on wages in FY2013/14 represents a 24 percent increase from the prior year, warned Demian.
"Decisive action is necessary to restructure the wage sector in the budget," added the minister, but he assured no layoffs or salary cuts have been proposed.
Spending on debt service was 5 percent lower than budgeted, reaching LE173.1 billion due to lower yields on bonds, according to Demian.
Egypt's fuel subsidy bill amounted to LE126.1 billion, while electricity subsidies were LE13 billion.
The government took the necessary procedures to lower spending on subsidies this year, noted Demian.
At the start of the current fiscal year in July, the government cut fuel subsidies by up to 78 percent and began a five year plan to gradually lower electricity subsidies.
These procedures are meant to achieve a deficit target of 10.5-11 percent for FY 2014/15.
Egypt's growth reached 2.2 percent in FY 2013/14, but is estimated to reach 3.5 percent in the current fiscal year.