Egypt's cabinet has finalised its 2012/13 LE538 billion state budget with a deficit reaching LE160 billion, a 20 per cent increase on last year's estimates, state owned Al-Ahram daily reported on Monday.

A ministerial commission will have been assigned to review the draft budget before submitting it to the parliament in the coming few days.

Kamal El-Ganzouri, the interim prime minister appointed in November 2011, finished reviewing the budget which is said to aim at stimulating economic growth to reach 3.5 per cent annually and achieving social justice.

The figures published in Al-Ahram, however, did not specify the size of investments in the new budget.

The deficit increased by 20 per cent compared to last year's original LE134 billion estimated deficit, which was later revised to LE144 billion. Deficit to total expenditure reached 30 per cent in 2012/3 versus 27 per cent in 2011/2. 

Total revenues are estimated to reach LE377 billion, an increase of 8 per cent. Expenditures will edge to LE538 billion, which translates into 10 per cent growth, Al-Ahram reported quoting an anonymous source in the Egyptian Ministry of Finance.

Such growth in revenues and expenditures are inline with inflation figures which averaged 9-10 per cent during the year.

On the expenditure side, three main items, subsidies, wages and interest payments make up 80 per cent of total government expenses.

Subsidies and social benefits were set at LE158 billion, a level similar to that of 2011/12. However, the difference, according to the source, will be in structure of the item.

Subsidies on supply products, which include food items and bread, increased by LE6 billion to reach LE25 million. Whereas, subsidies on petroleum products saw cuts of LE15 billion, coming to LE80 billion, due to the implementation of the new coupon system of distributing butane cylinders and petrol.

Government wages and salaries were assigned LE135 billion in the 2012/13 budget versus LE118 billion in 2011/12. The increase is driven by an expected 10 per cent increase in the salaries of the 6 million employees working in the government's administrative arm.

Interest on the domestic and foreign debt reached LE136 billion a growth of one third reflecting the heavy borrowing Egypt's government has been undertaking and the continuously rising yields on government bills and bonds.

Income Tax revenues, on the other hand, are expected to increase by 11 per cent on the 2011/12 budget to reach LE145 billion. Sales tax is also seen to grow by 13 per cent at LE80 billion. Customs revenues are set to grow by LE1 billion, making the total LE19 billion.

The rest of tax revenues, which are generated through different stamp duties and other charges, reached LE13 billion.

Non-tax revenues rose to a total of LE121 billion, out of which LE113 billion was from the Suez Canal, Petroleum Authority and the Central Bank.

A ministerial source said that the new budget aims to stimulate the economy through incentives to get suspended economic activity moving again. Growth rates are targeted to reach 3.5 per cent versus 1.8 per cent last tax year.