Egypt's debt pushed to 90% of GDP
The government is aiming to decrease the budget deficit to 10% of GDP, pushing debt down to 90% of GDP in the fiscal year (FY) 2014/2015 state budget, Minister of Finance Hany Kadry Dimian announced during a Monday press conference.
He added that the government would reduce expenditures allocated to petroleum subsidies by EGP 44bn.
The FY2014/2015 state budget was approved by President Abdel Fattah Al-Sisi, the Ministry of finance announced late Sunday.
The total expenditure is EGP 789bn and the total revenues are expected to reach EGP 549 bn. The approved budget has witnessed some adjustments from the draft that was sent to presidency on the first day of elections. In the draft, the targeted revenues were around EGP 517bn while the expenditures were EGP 807bn.
The budget deficit in FY 2013/2014 registered EGP 243bn, 12% of GDP. During FY 2012/2013, the budget deficit registered 13.7% of GDP and is expected to reach 12% in FY 2013/2014.
The minister pointed out that Egypt has received around $23bn from the Gulf States and that “without that assistance the budget deficit would have registered 15% of GDP”.
Discussing domestic and foreign debt, the finance minister said the budget would push debt down from 94% of GDP, registered in the FY 2013/2014 budget, to around 90% of GDP.
The minister added that the government plans to work on decreasing the debt to reach between 80% and 82% of GDP over the next three years. The five-year plan will focus on pushing the debt to less that 80% of GDP.
On petroleum subsidies, the minister said the funding allocated to those subsidies will decrease by EGP 44bn to reach EGP 103bn.
In the pre-adjusted budget draft, petroleum subsidies were cut to EGP104bn.
Dimian explained that EGP 207bn will be allocated for wages in the approved budget, as opposed to the EGP 181bn allocated in the 2013/2014 budget.
“The wages system in Egypt is closer to randomness than to being organised,” the minister said, adding that “a project for income law will be submitted to the cabinet during the coming period.”
Last week, Prime Minister Ibrahim Mehleb indicated that the government has been “clearly tasked” to apply the maximum wage at all levels of the public sector.
Last Tuesday, Al-Sisi announced that he had yet to approve the state budget’s current draft for FY 2014/2015, which would push the budget deficit up and increase the debt to over EGP 2tn.
“I met with the prime minister, the finance minister, the planning minister, among other ministers, to discuss the 2014/2015 draft for state budget,” Al-Sisi said, adding that “some adjustments and revisions need to be made”.
Additional reporting by Abdel Razek Al-Shuwekhi
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