Egypt’s fiscal deficit could be wider than the value given by the minister of finance Samir Radwan yesterday, a recent release by Beltone financial confirms.
‘The deterioration in Egypt’s fiscal deficit could be wider than that presented by the Minister of Finance’ the statement reads.
‘We had initially forecast a recovery in revenue growth in FY2010/2011 of 15% after falling 5% in FY2009/2010’ the report further said.
Yesterday Radwan expected Egypt’s fiscal deficit to widen to 8.2 - 8.4% of GDP, saying the widening of the deficit will be the result of an expected cut in tax revenue as a result of the slowdown in economic activity.
The report also expects a ‘a slowdown in business activity and a decline in inflows of foreign direct investment, government’s tax receipts (60% of total revenues) during the second half of the fiscal year’ due to an expected retrenchment in household consumption.
Beltone also forecasted a weakened overall revenue growth of FY2010/2011, ‘which we believe could slow down to around 5%’
‘Indeed, the timing of the unfolding political unrest may have spared the first half of the fiscal year from its economic repercussions’ Beltone comments ‘However, with a weaker outlook for tax revenue growth in the second half of the fiscal year, coupled with a rise in expenditure, albeit limited, could have a more notable impact on the overall deficit/GDP ratio’