CAIRO: Egypt’s budget deficit will be 7 to 7.5 percent of gross domestic product in 2009/10 and economic growth is picking up, the investment minister said on Tuesday.
The budget deficit in the fiscal year 2008/09 was 6.9 percent of gross domestic product. Budget spending and revenue figures published in June by the Finance Ministry indicated, at the time, that the deficit could rise to 8.4 percent in 2009/10.
“The budget deficit is going to be ranging from 7 to 7.5 pct of GDP,” Investment Minister Mahmoud Mohieldin told a conference in Cairo, referring to the financial year that started July 1.
He also said economic growth would be more than 5 percent and could exceed 5.5 percent in 2009/10. The government has previously said growth would be up to 5.5 percent.
“The projection for this year is north of 5 percent, and some of the scenarios are even more promising, of more than 5.5 percent,” Mohieldin said.
Some economists have forecast slower growth. EFG-Hermes has said it expects growth of 4.3 percent this financial year. Prime Securities has forecast growth of no more than 4.8 percent.
Egypt’s economy grew by 4.7 percent in 2008/09, which was also more than analysts had been forecasting.
Commenting on the deficit expectations announced by the minister on Tuesday, EFG-Hermes economist Simon Kitchen said: “They are better than the Ministry of Finance suggested earlier this year; this may be because of higher growth estimates.”
Egypt has been hurt by a decline in tourism earnings, Suez Canal revenue and foreign investment in the world downturn but analysts say the country has proved relatively resilient, partly because its banks are flush with cash and the economy is diversified.
To help counter the downturn, the government implemented a stimulus package in the last financial year and has said it was considering another stimulus package for 2009/10.
“This year, as I said, we are considering some further spending on infrastructure of the magnitude of 8 billion to 10 billion Egyptian pounds ($1.4 billion-1.8 billion),” Mohieldin said.
“Some of that comes through the fact that some of the projects that started last fiscal year have to be continued,” he said, adding that whether the package was implemented could depend on how much private investment Egypt was able to attract.
Mohieldin said he wanted to increase private investment to 135 billion pounds in 2009/10 from 120 billion pounds last year.
“If we see that the private sector is doing well ... (and) my targets of 135 billion Egyptian pounds are coming along, we are not going to be requiring that (new stimulus),” he said.