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Reuters Africa: Egypt raises budget deficit estimate ahead of loan talks

MENA reported on Monday that Egypt has now raised its deficit forecast to 150 billion Egyptian pounds from an initial 134 billion.
13.03.12 | Interesting article at Reuters Africa

Egypt has raised its budget deficit forecast for this fiscal year by 11.7 percent, the state MENA news agency said on Monday, in a move that may facilitate its efforts to line up an urgently needed international loan.

Cairo is struggling to stave off a fiscal crisis following more than a year of political and economic turmoil and is seeking a $3.2 billion dollar loan from the International Monetary Fund.

But the IMF has said Egypt has underestimated the size of its deficit and has been pressing the government to find ways to reduce the shortfall, a document obtained by Reuters showed.

MENA reported on Monday that Egypt has now raised its deficit forecast to 150 billion Egyptian pounds from an initial 134 billion.

"This is due to measures the government took to satisfy demands by labour groups and expenses related to elections," MENA quoted Deputy Finance Minister Abdul-Aziz Mohamed Tantawy as telling Parliament's Planning and Budget Committee.

It made the lower forecast, which was equivalent to about 8.7 percent of gross domestic product, when it originally drew up its budget for the financial year that began on July 1, 2011.

On Thursday, the IMF said that Egypt had recently handed over details of its economic plans and that a delegation would visit Cairo later in March for further discussions on the loan.

The government has been beset by a series of strikes and sit-ins by workers demanding higher wages, better working conditions, more jobs and permanent contracts for temporary labourers. At the same time, revenue has declined as tourists and investors shy away from the country.

Tantawy said the government had budgeted 750 million pounds for the parliamentary and presidential elections but that the votes had cost 1.5 billion so far.