Egypt’s budget deficit narrows 7.6% y/y to USD 26.49bn in first 11 months of FY2013/2014

By bne IntelliNews July 1, 2014

Egypt’s cumulative budget deficit for the first 11 months of FY2013/2014 (July- May) shrank 7.6% y/y to EGP 189.3bn (USD 26.49bn) due to revenues being boosted by Gulf aid, according to figures released by the finance ministry.

On the revenue side of the balance sheet, total state revenues climbed 24.5% y/y to EGP 337.8bn in the first 11 months of the FY2013/2014 with grants from foreign governments increasing from EGP 4.6bn to EGP 51.3bn. Taxation revenues slightly grew by 4.1% y/y to EGP 212.9bn with income tax and property taxes making a positive contribution. While income from sales and customs taxes stagnated reflecting the moribund state of the economy.

On the expenditure side of the balance sheet, total government spending jumped by 9.5% y/y to EGP 519.6bn in the first 11 months of the FY2013/2014. The growth in spending was due to a 23% leap in salaries and compensations of state employees to EGP 151.9bn and an 11.4% increase in the cost of debt servicing to EGP 139bn. While the state subsidy and welfare bill was cut by EGP 10bn to EGP 140.6bn over the period.

At the end of May 2014, Egypt’s primary budget deficit, before accounting for debt servicing costs, stood at 2.5% of the estimated GDP of EGP 2.05trn for FY2013/2014. While the overall budget deficit to GDP ratio hit 9.3% thanks to substantial Gulf aid received earlier in the fiscal year.

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