Egypt budget deficit widens to 9.8 percent of GDP

Rising public sector wages and welfare costs caused Egypt’s budget deficit to widen to 9.8 percent of gross domestic product in the first 10 months of the financial year, up from 9.5 percent a year earlier, the Finance Ministry said Tuesday.

In its monthly report for May, the ministry said the budget deficit stood at 273 billion pounds ($30.7 billion) between July 2015 and April 2016, compared to 231 billion pounds in the same period a year ago.

Egypt’s financial year runs from July 1 to June 30.

Basic commodities also contributed to the budget deficit, which a rise in tax income failed to contain, the ministry said in its report.

Egypt has been struggling to stem an economic crisis caused in part by an acute foreign-currency shortage and surging inflation.

The report said economic growth slowed to 4.5 percent during the first half of the 2015-16, from 5.5 percent in the same period last year. The ministry cited a slowdown in global growth rates.

GDP growth in the first quarter of this financial year stood at 5.1 percent, up from 3.8 percent in the same period the year before.

The foreign-currency shortage has battered Egypt, which depends on imports for everything from food to fuel. In March the central bank devalued the pound to 8.78 per dollar.

In a bid to curb inflation, the central bank Thursday raised its key interest rates to their highest levels in years.