Egypt budget deficit soars to $31.92bn
Cairo, September 13, 2013
Egypt's budget deficit soared in the last fiscal year as spending on interest rates and energy subsidies increased.
Egypt's budget deficit rose to 220 billion Egyptian pounds ($32 billion) at the end of the last fiscal year which ended June 30, putting it at 14 percent of gross domestic product, the cabinet said in a statement on Thursday.
The interim government's goal is to boost economic growth to 3.5 percent in the current year from 2 percent while shrinking the budget deficit to around 10 percent, the statement added.
"(This) will be done through the proper use of public resources and directing part of the foreign aid and grants to public investment spending," the statement said.
The government is keen to improve conditions for the country which has been battered by more than two years of political and economic turmoil that sent investors and tourists fleeing. Despite a mushrooming budget deficit, it is under intense pressure to avoid unpopular austerity measures.
Egypt's deficit has jumped since the beginning of 2013 to nearly half of all government spending.
The cabinet statement added that Egypt's internal debt at the end of June reached 1.387 trillion pounds while external debt reached $43.5 billion.
The government aims to shrink Egypt's unemployment rate to 9 percent from the current 13 percent, the statement said.
State revenue increased by 13.5 percent to 344.6 billion pounds in the financial year to June 30, the finance ministry said in a statement according to state news agency MENA, which also cited the ministry as saying tax revenue rose 21 percent.
Spending rose 23.7 percent to 582.7 billion pounds. Interest payments jumped 40.7 percent to 147 billion pounds, MENA said.
Subsidies, grants and social benefits increased 31 per cent to 197 billion pounds, MENA added.
The state has been struggling to meet soaring energy bills caused by high subsidies on fuel products for the country's 84 million-plus population.
Since the uprising that ousted autocrat Hosni Mubarak from the presidency in 2011 the government has financed the deficit by selling treasury bills and bonds to local banks, but the ability of banks to take on new debt has been stretched to the limit.
Since Arab gulf states pledged $12 billion in aid to Egypt in July, the interest rates on treasury bills have fallen by around 3 percent, taking pressure off the cost of borrowing.-Reuters