Egypt’s budget deficit widened to 9.4 percent of GDP by the end of March, according to the Ministry of Finance’s monthly bulletin for April. At the same time last year, the deficit stood at 7.3 percent of GDP.
The government was originally aiming for a 10 percent deficit for 2014/15, which comes to a close at the end of June. In March, the Finance Ministry revised that figure to 10.5 to 11 percent.
Last fiscal year closed with a deficit of LE255.4 billion, equivalent to 12.8 percent of GDP.
Numbers for the current fiscal year have been helped somewhat by strong GDP performance, estimated at 5.6 percent in the first half of the year, compared to 1.2 percent in the first half of the 2013/14 fiscal year.
In absolute terms, the deficit has grown by over 50 percent compared to the same period last year. As of March 2015, the deficit stood at LE218.3 billion, compared to LE145 billion recorded in March 2014.
Much of the gap is due to a sharp drop in grants. In the same period in 2013/14, Egypt received $3 billion in grants from the United Arab Emirates and Saudi Arabia, as well as LE20.3 billion in stimulus funds released by the Central Bank of Egypt. Without these exceptional inflows, the Ministry notes, the budget deficit would have decreased by 0.1 percentage points.
Without a major cash infusion, revenue from July-March 2014/15 declined fractionally to LE282 billion, compared to LE282.7 billion in the previous fiscal year.
Expenditure, meanwhile, grew by almost 16 percent to reach LE490.6 billion, compared to LE423 billion the year before.
Wage spending continued to drive expenditures, growing 17.6 percent to reach LE143.3 billion. Interest payments were up 11.7 percent to exceed LE127 billion. Subsidy spending was also up 12.8 percent to reach LE133.4 billion, despite a fall in global fuel prices. Electricity subsidies reached LE20.6 billion, almost doubling compared to the same period last year.
The tax sector did show positive growth, with revenue rising by more than 20 percent to reach LE204.9 billion. Goods and services taxes were the biggest gainers, up by almost 35 percent to reach LE86.4 billion. Taxes on trade, property and income grew as well, but not fast enough to outpace spending.