CAIRO: Egypt has revised the draft budget for the fiscal year (FY) 2015/2016, tightening the projected deficit to 8.9 percent of GDP, Finance Ministry said in a new budget statement posted Wednesday on its website.
An earlier draft issued June 18 had estimated the budget deficit at 9.9 percent of GDP, lower than 10.8 percent forecasted in FY 2014/2015 (ended June 30.)
Meanwhile, it was reported that President Abdel Fattah al-Sisi rejected the initial draft, requesting some amendments. The new revised statement yet awaits Sisi’s ratification to come into effect.
Sisi had approved a revised budget for FY 2014/2015, where the gap was reduced from 292 billion EGP (14 percent of GDP) in the initial draft to 240 billion EGP (10 percent of GDP.)
In the new draft budget, projected total expenditure was slashed to 864.5 billion EGP, compared to 885 billion EGP in the previous draft, with wages cut by 10 billion EGP to 218 billion EGP.
Meanwhile, projected total public revenues were raised to 622.2 billion EGP, from 612 billion EGP in the previous draft.
“Expenditure on social programs is projected to amount to 429 billion EGP, nearly 50 percent of total public expenditure and an 11.8 percent up from FY 2014/2015,” the statement read.
Economic growth was projected at about five percent, compared to a projected 4.2 percent during FY 2014/2015, and an average of two percent over the past three year.
Last week, Moody’s Investors, a global credit rating agency, criticized the previous draft budget for the 2015/2016 fiscal year, saying it hints at a slower fiscal consolidation pace.
“Egypt’s government is working on slashing the budget deficit to eight percent of GDP in the coming four years,” Youm7 quoted Minister of Investment Ashraf Salman said earlier in April.
Moody’s added: “This slowdown in fiscal consolidation, while small, is credit negative because it will translate into a smaller reduction of Egypt’s already high government debt.”
The rating agency further noted that “Egypt is facing declining budgetary grants,” which would slip to 2.2 billion EGP in fiscal 2016 from 25.7 billion EGP in fiscal 2015 and 95.9 billion EGP in fiscal 2014.