Egypt draft budget projects 9.9 pct deficit, 5 pct growth

The draft budget projects a 12 percent increase on the current fiscal year

Published: Updated:

Egypt's cabinet approved a draft 2015/2016 budget that projects a deficit of 9.9 percent of gross domestic product, narrowing slightly from an expected gap of 10.8 percent in the current fiscal year.

The draft, which has yet to be approved by the president, sees a big increase in expenditure on social welfare programmes.

"Achieving social equality and improving the standard of living for those in need is the focal point of this budget," Finance Minister Hani Qadri Dimian said in a cabinet statement.

The draft budget projects a total of $56 bln in expenditure on social programs, or about 49 percent of total public expenditure and a 12 percent increase on the current fiscal year.

Growth was projected at about 5 percent versus a projected 4.2 percent in the fiscal year ending on June 30.

Projected public revenues stand at $80.26 bln, a 26 percent increase. Projected expenditure is $116 bln, up 20 percent.

The budget also earmarks $5 bln for bread and commodities subsidies.

The projected deficit of $36 bln compares to $31 bln that was approved in the 2014/2015 fiscal year budget.

Political turmoil since the 2011 uprising that ousted Hosni Mubarak has hurt Egypt's economy and hit investor confidence. The government has been walking a fine line between trying to cut its deficit whilst luring investors and restoring growth.

"The economic situation is witnessing gradual improvement and this is reflected in the increase in growth...and the ratings by international agencies," Dimian was cited as saying in the cabinet statement.

But he also said "responsibility must be borne towards completing economic reforms".

Cairo has received billions of dollars in grants, loans and petroleum products from Gulf Arab allies since former army chief Abdel Fattah al-Sisi overthrew President Mohamed Mursi in 2013 following protests against his rule.

The aid has proven to be a lifeline for Egypt's economy but the government is also working on implementing long-awaited reforms.

The draft budget earmarked $280 mln in grants.

Egypt introduced painful reforms last July, slashing energy subsidies by $5 bln, which has led to steep rises in the price of fuel and electricity.

Projected revenues from taxes in the current draft budget stood at $57 bln. Spending on public investments stood at $9 bln.

The cabinet statement said the government targeted decreasing the deficit to 8.0-8.5 percent of GDP in 2018/2019 as well as lowering public debt to 85 percent of GDP.