Arab Today, arab today egypt budget deficit seen 125 rise
Last Updated : GMT 22:44:04
Arab Today, arab today
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Egypt budget deficit seen 12.5% rise

Arab Today, arab today

Arab Today, arab today Egypt budget deficit seen 12.5% rise

Cairo - Arabstoday

Egypt’s budget deficit will rise 12.5 per cent to $22.26 billion (135 billion Egyptian pounds) in the fiscal year that began on July 1, a draft budget issued on Monday. Egypt’s borrowing costs have soared since last year, which sent the economy into a tailspin and left local banks taking almost the entire burden of lending to the state. The outgoing government has tried to rein in the deficit by cutting energy subsidies for industry but new Islamist President Mohamed Mursi needs to secure emergency funds from abroad to head off a budget and balance of payments crisis. Total expenditure will climb to 533.8 billion pounds this year from 476.3 billion in 2011/12, the ministry said in the draft budget, posted on its website. A quarter of that would go to pay the interest on debt, which will rise 26 per cent to 133.6 billion pounds. Subsidies on basic foodstuffs will grow by 41 per cent but overall subsidies fall 15 per cent because of lower outgoings on fuel. The budget deficit represents 7.9 per cent of projected gross domestic product (GDP), down from 8.2 per cent a year earlier, said the ministry. The estimate implies Gross Domestic Product growth of 4 to 4.5 per cent, substantially above the level forecast by economists. The government says it can achieve that target through growth in domestic demand — consumer spending has weathered last year’s uprising relatively well and a gradual return in investment. Economists polled by Reuters this month saw the economy growing 3 per cent in the 2012/13 fiscal year, faster than the around 2 per cent expected for 2011/12 but around half the level in the years before the uprising. Average yields declined at an auction of $824.4 million of 91-day and 273-day treasury bills on Sunday, continuing to ease after the arrival of a new president raised hopes of a return to stability. “There is relative growing stability in Egypt, not the ultimate stability that the market is optimally seeking, but we are on the right track, “ said Khalil El Bawab, EFG Hermes director of fixed income asset management. He said the recent declines in T-bill yields corrected a spike towards the end of June when the final round of the presidential election took place and results were unknown. “For that to be a sustainable trend, we have to see FDI, and fixed-income money flowing into the country,” he added. Reflecting the uncertainty over Egypt’s finances, the government is selling long-term debt at near-record rates. The average yield on ten-year bonds auctioned on Sunday was 17.02 per cent. From gulftoday

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