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State targets 4.3 percent growth next financial year

Egypt will target a growth rate of 4.3 percent of GDP, a total deficit ratio of between 9.5 and 10 percent, and a public debt level of 91 to 92 percent of GDP for the 2015/16 financial year, which begins in July.

According to a statement by Finance Minister Hany Kadry Demian, the government plans to achieve these goals through a 2015/16 General Budget that continues fiscal reforms put in place by the current government. Those reforms include measures to widen the tax base, reduce fuel subsidies and introduce smart cards for subsidized bread.

The figures given by Demian indicate that the government anticipates the country’s economic recovery will gain momentum during the 2015/16 fiscal year.

Egypt is currently targeting a growth rate of 3.8 percent for the 2014/15 fiscal year, while the 2014/15 budget calls for a deficit of 10 percent. Public debt stands at around 95 percent of GDP.

Following a mission to Egypt last month, the International Monetary Fund concurred with Egypt’s projection of 3.8 percent GDP growth, but forecast that Egypt’s budget deficit would reach 11 percent of GDP this fiscal year.

Demian said he was beginning preparations for next years budget early, in order to allow ministries and other public bodies ample time to comply with the state’s overall objectives and fiscal policies as they plan for their own spending in 2015/16.

However, this raises questions of how next year’s budget will ultimately be approved.

Under Egyptian law, the government is obliged to release a draft budget at the beginning of April, a deadline it has missed since the 2011 Revolution. By beginning preparations in December, the Finance Ministry appears to be on track for this deadline.

However, early preparations could mean that there will be limited participation by an elected legislative branch.

Egypt’s last three budgets were passed in the absence of a parliament, leading to criticisms by rights groups that budgetary processes lacked transparency and were “surrounded by suspicions of conflicts of interest related to their preparation, drafting, and implementation by the executive branch in a unilateral manner.” 

Parliamentary elections have still not been scheduled, nor is it clear when newly elected MPs might take office, but last month President Abdel Fattah al-Sisi announced that elections would be held before the end of March 2015.