MOF: Deficit rises to LE186 billion in February

Egypt’s budget deficit widened to almost LE186 billion from July 2014 to February 2015, according to the Ministry of Finance.


Revenue for the period reached LE208.1 billion, while expenditure reached LE385,157, according to the March edition of the Ministry’s Financial Monthly bulletin.


However, the report does not list petroleum subsidies on the expenditure side, or petroleum royalties and taxes on the state oil company on the revenue side, making it difficult to calculate the actual deficit.


According to the figures provided by the ministry, expenditures were up by slightly over three percent to reach LE385.1 billion during the reporting period. The increase was led by employee compensation, which grew by 15.7 percent year-on-year to reach LE125.2 billion.


Debt service was also on the rise, with interest payments up 11 percent to reach 105.9 billion and principal payments up 34.7 percent to reach LE122.6 billion.


In the meantime, public sector debt rose by 22.8 percent year-on-year in December, to reach LE1.895 trillion.


The report from the Ministry lists subsidy expenditure of LE78.2 billion from July 2014 to February 2015, not including any petroleum subsidies.


In a separate report last week, the Ministry announced it had spent LE44.7 billion on petroleum subsidies from July to December of 2014, suggesting that the actual July-February subsidy bill exceeds LE125.9 billion, a roughly 12 percent increase, even without adding in January and February data for petroleum subsidies.


On the revenue side, the budget has been hit hard by the decline in grants from foreign governments, which plummeted to LE7.8 billion from July-February 2014/15 after recording LE51.3 billion in the same period the year before.


The US$12 billion in grant commitments made during the Egypt Economic Development Conference in March could help this figure to recover by the end of the fiscal year.


Tax revenue, too, is incomplete due to the absence of data from the state oil company, which at this point last year accounted for almost 60 percent of taxes on corporate profits. With this key figure missing, tax revenues crept up slightly to reach 149,780 for the period.


Taxes on goods and services made the greatest gains, up by 32.6 percent year-on-year to reach LE74 billion. Payroll taxes also showed a solid 16 percent growth, although still only reaching LE16.5 billion.


The 2014/15 budget calls for a deficit of LE240 billion. According to Ministry’s March report, seven months into the fiscal year, the government is already 77.5 percent of the way there.


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