Egypt’s final budget deficit for FY2013/2014 as a percentage of GDP was lower than the previous year, nevertheless, it pushed total government debt to a record high, finance ministry said on its website. The budget deficit grew in absolute terms from EGP239.7bn ($33.5bn) in FY2012/2013 to EGP255.4bn in FY2013/2014 (ended in July) despite a massive EGP74bn in foreign aid flows including EGP21bn in cash grants and EGP53bn in petroleum products.

As a result, the budget deficit declined in relative terms as a percentage of GDP from 13.7% in FY2012/2013 to 12.8% in FY2013/2014. Consequently, domestic debt grew from EGP1.64trn, equivalent to 93.8% of GDP, to EGP1.9trn equivalent to 95.5% of GDP in FY2013/2014.

Overall public spending grew 19.3% y/y to EGP701.5bn in FY2013/2014 of which salaries of public servants accounted for 25.5%. Interest on government debt also ate up 25% of total expenditures growing by 17.8% y/y to EGP173bn, including EGP168bn interest paid on domestic debt and EGP5bn interest paid on foreign debt.

Meanwhile, public spending on procurement of goods and services for the government constrained by austerity measures edged 2.2% y/y higher to EGP27.2bn. Whereas, expenditures on subsidies, grants and welfare increased by 16% y/y to EGP228.6bn, including EGP126bn spent on fuel subsides, EGP 35.5bn spent on subsidies goods and EGP625.8mn in agricultural subsidies.

Treasury revenues jumped 30.4% y/y to EGP456.8bn mostly due to the huge injection of aid money. Taxation income rose by a meager 3.6% y/y to EGP260.3bn due to a 0.7% y/y decline in corporate taxes and a 14.7% y/y plunge in sales tax collected on touristic hotels and restaurant services. Income tax revenues on salaries increased by 3.7% y/y to EGP120.9bn in FY2013/2014, while sales taxes revenues on goods and services declined by 1.1% y/y to EGP92bn.