Budget deficit to convert into surplus in new FY: El-Garhy

CAIRO – 9 May 2017: The primary budget deficit of the current fiscal year (FY 2016/17) is projected to be between 1.6-1.8 percent of GDP and is targeted to turn into a primary surplus at 0.3 percent, Minister of Finance Amr El-Garhy said Monday in a speech before Parliament.

Countries' primary surplus (deficit) refers to the component of the fiscal surplus (deficit) that is comprised of current government spending less current income from taxes, and excludes interest paid on government debt.

If a country has larger levels of income relative to current spending, it is said to have a primary surplus; if a country has larger levels of current spending relative to income, it is said to have a primary deficit.

Garhy was invited to the parliament to review the financial statement of the new budget for FY 2017/18. He pointed out that this expected surplus is the first in decades.

He also increased his expectations for the primary surplus of FY 2018/19’s budget deficit to be between 1.7-2 percent.

Meanwhile, Garhy reviewed a comparative study showing that budget deficit in FY 2015/16 exceeded 12.3 percent and total general revenues amounted to 491.5 EGP billion, achieving an increase of only 5.6 percent.

Tax revenues registered 352 billion EGP in FY 2015/16. Expenditures increased by 11.5 percent compared to a 6.5 percent increase in revenues, which represents a significant increase in the budget deficit rate.

The initial results of the current FY 2016/17 indicate a great improvement. The primary deficit decreases to be at 1.2 percent of GDP, compared to a 2.9 percent deficit from the GDP during the first nine months of the previous FY 2015/16.