Green light for Egypt budget that projects 9.9pc deficit

Egypt's cabinet approved a draft 2015/2016 budget that projects a deficit of 9.9 per cent of gross domestic product (GDP), narrowing slightly from an expected gap of 10.8pc 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.

The projected public revenues stand at about 612 billion Egyptian pounds ($80.26bn), a 26 per cent increase. Projected expenditure is 885bn Egyptian pounds, up 20pc.

"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 431bn Egyptian pounds in expenditure on social programmes, or about 49pc of total public expenditure and a 12pc increase on the current fiscal year.
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Growth was projected at about 5pc versus a projected 4.2pc in the fiscal year ending on June 30. The budget also earmarks 38.4bn Egyptian pounds for bread and commodities subsidies.

The projected deficit of 281bn Egyptian pounds compares to 240bn that was approved in the 2014/2015 fiscal year budget.

Political turmoil since the 2011 uprising that toppled 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 Arab allies since former army chief Abdel Fattah Al Sisi overthrew president Mohamed Mursi in 2013 following protests against his rule.