Egypt to amend draft budget in effort to woo IMF
Egypt's Ministry of Finance has withdrawn the 2013/14 draft budget it submitted unofficially to the Shura Council in late March. It will make adjustments to comply with the updated economic plan it recently submitted to the International Monetary Fund.
The adjustments could include cuts to subsidies and public-sector salaries, a parliamentary source told state-owned daily Al-Ahram.
The IMF had requested a more rigorous economic plan from the Egyptian government following a visit by an IMF technical mission to Cairo in April. Egypt aims to secure a $4.8 billion loan from the international lender to shore up its finances.
"The stalled negotiations between Egypt and the IMF might push the government to quicken the pace of reforms," the source said.
The new measures might include a rise in the general sales tax to 12.5 percent, up from 10 percent, the source added.
A high-level Egyptian economic delegation, including the ministers of finance, planning and international cooperation, as well as the central bank governor, are continuing loan negotiations with the IMF in Washington.
The delegation reportedly presented an updated programme with new figures to help allay IMF concerns.
Finance Minister El-Morsi El-Sayed Hegazy was scheduled to officially present the draft budget to the Shura Council this week.
The finance ministry could not be reached to update Ahram Online on whether the minister will postpone the presentation of the budget.
A leaked summary of the draft budget showed the budget deficit is expected to reach 9.5 percent of gross domestic product (GDP) in the 2013/14 fiscal year (beginning 1 July 2013), down from 10.7 percent in the current fiscal year.
Energy subsidies consume 20 percent of Egypt’s budget, and authorities estimate the energy subsidy bill will reach LE120 billion ($17 billion)in the financial year ending 30 June.
In total, the subsidies bill is forecast to grow by 12 percent in the coming fiscal year, a growth level that is significantly lower than that seen in other major expense items, such as public sector wages.
- Jumping on the IMF's bandwagon: Kuwait quietly embarks on subsidy-slashing journey
- Even the numbers are on the feminist side: companies with females in top management yield higher returns
- Kingdom in debt, Kingdom in danger: Saudi Arabia's pending deficit raises frightening possibilities
- 'Dead aid': is there any hope left for South Sudan's economy?
- Why the ME's high net worth individuals should be investing in family businesses