Published — Sunday 5 May 2013
Last update 5 May 2013 6:41 am
CAIRO: Egypt hopes to lower its budget deficit to 5.5 percent in the 2016-1017 fiscal year from 10.7 percent in 2012/13, the finance minister told Egypt’s Al-Ahram daily newspaper.
Egypt’s budget deficit will reach 197.5 billion Egyptian pounds ($ 28.7 billion) or 9.5 percent of gross domestic product in the fiscal year starting July 1 after a revised 184.9 billion pounds or 10.7 percent in 2012/13, according to a draft budget previously seen by Reuters.
The economy of the Arab world’s biggest state was badly hit by more than two years of turmoil following an uprising that ousted former President Hosni Mubarak, which raised the deficit, drained foreign currency reserves used to pay for imports and led to a currency crisis.
Egypt’s deficit cut is a crucial step to secure a $4.8 billion loan from the International Monetary Fund (IMF). The government plans to curb spending on fuel subsidies and introduce tax changes that would target the wealthy.
Finance Minister Al-Mursi Al-Sayed Hegazy said in remarks to Ahram that the country was expecting taxes from “economic activities to reach 664.5 billion pounds ($ 1.03 trillion) in three years from 267 billion pounds this fiscal year.”
An IMF mission failed last month to conclude a loan deal over political and economic concerns but officials from both sides said talks were continuing.
The IMF has urged Egypt to reduce energy subsidies to help shore up government finances.
In other comments reported by Akhbar Al-Youm newspaper, Hegazy said Egypt might not even need all the loan and could give it up but only needs the first tranche to prove to the world “it has a lively economy.”
Approval was enough to open door for Egypt to get money and investments from other places, he added.