Egypt’s budget deficit registers EGP 195.8 bn in first 7 months of 2016/17

CAIRO – 19 April 2017: Egypt’s budget deficit registered EGP 195.8 billion (around $108 million) during the first seven months, from July to January, of the current fiscal year (FY) 2016/2017, the Finance Ministry announced in a Wednesday statement.

“The EGP 195.8 billion deficit represents six percent of Egypt’s GDP, compared to EGP191.6 billion in the previous FY 2015/2016,” the statement added.

The expected budget deficit for the current FY 2016/2017 is EGP 322 billion, to be bridged by the Central Bank’s governmental bills and bonds, government debt instruments as well as international loans and aids provided from Arab countries.

Egypt’s consecutive governments have been struggling to put an end to the increasing budget gap, forcing the government to launch an ambitious reform program in 2014 to revive the faltering economy.

The economic reform program included a bold decision to float the Egyptian Pound free, slashing subsides and introducing a Value Added Tax (VAT).

As a result of cutting the subsidy bill in the fiscal year 2014/2015, the deficit fell to 11.5 percent of GDP, from more than 13 percent in 2013/2014.

The deficit then widened again in 2015/2016 to reach 12.2 percent, compared to a targeted 8.9 percent, as reform pace slowed down with the government postponing the implementation of capital gains tax and VAT.