Egypt’s budget deficit could reach as much as 12 percent of the country’s GDP in the 2012/13 fiscal year, compared to previous forecasts of 10.7 percent.
The revised figure was revealed by Finance Minister El-Morsi El-Sayed Hegazy in a Tuesday address before the Shura Council (the upper house of Egypt’s parliament, currently endowed with legislative powers), during which he submitted the government’s proposed 2013/14 budget.
The revised forecast is in line with earlier predictions by Cairo-based investment house EFG-Hermes.
In the upcoming 2013/14 fiscal year, meanwhile, the government expects the budget deficit to reach LE197 billion, or 9.5 percent of GDP.
EFG-Hermes, for its part, believes the government will be hard pressed to keep the deficit under LE200 billion. “We believe it will be difficult to achieve such a goal,” EFG-Hermes economist Mohamed Abu-Basha told Ahram Online.
The government also expects tax revenue to increase by LE90 billion for 2013/14, a forecast Abu-Basha describes as “very ambitious.”
“But achieving this goal would mean the government would be able to implement its plan to cut subsidies starting next June, which doesn’t seem feasible,” he said.
To reduce the deficit, the government plans to implement a raft of measures, including planned tax increases.
On the expenditures side, meanwhile, the government is planning to cut Egypt’s fuel subsidies.
“If these steps aren’t taken, the budget deficit will soar even higher,” the finance minister told Shura Council members in reference to proposed amendments to tax legislation that were recently debated by the council.
Total state revenue is expected to reach LE497.1 billion for 2013/14, up from LE393.4 billion in the current fiscal year.
Egypt’s planning minister, meanwhile, told Shura Council members that economic growth in 2013/14 was expected to stand at 3.8 percent, compared to 2.5 percent in 2012/13.
The Shura Council, the upper house of Egypt’s parliament, has held full legislative powers since the dissolution of parliament’s lower house in June of last year.
Ahram
