Cabinet approves draft budget for 2016/17 targeting 9.9% deficit, 5.2% growth

Egypt’s Cabinet approved on Wednesday a draft budget for the 2016/17 fiscal year, anticipating economic growth above 5.2 percent and a deficit of 9.9 percent.

Meanwhile, Egypt looks set to fall short of the targets set in the current budget.

The budget deficit for the current fiscal year — 2015/16 — is projected to reach 11.5 percent of GDP, the finance minister announced, compared to 8.9 percent targeted in the current budget. The minister of planning said this year’s GDP growth rate is expected to reach 4.4 percent, compared to an earlier target of up to 5 percent.

Speaking at a Cabinet press conference, Finance Minister Amr al-Garhy anticipated revenue for the 2016/17 fiscal year, which begins in July 2016, would reach LE627 billion. Of that, LE434 billion is expected to come from taxes, including LE191 billion in income taxes. Revenue for the current year is expected to reach LE520 billion, Garhy added, compared to LE622 billion anticipated in the budget.

Garhy said the draft budget calls for LE936 billion in spending in 2016/17, leaving an anticipated budget deficit of around LE309 billion for the upcoming year. 

Spending this fiscal year is expected to reach LE827 billion, Garhy said. That would bring the projected 2015/16 deficit to LE307 billion, compared to LE250 billion anticipated in the budget.

Minister of Planning Ashraf al-Araby said the draft budget targets an economic growth rate of 5.2 percent during 2016/17, bringing Egypt's total GDP to LE3.2 trillion. Growth for the current fiscal year is anticipated to reach 4.4 percent, Araby added. Around this time last year, the government projected that the 2015/16 growth rate would reach 4.5 to 5percent.

Achieving the targeted 2016/17 growth rate will require LE531 billion in investments, equivalent to 16.5 percent of Gross Domestic Product, Araby said. The minister explained that the bulk of these investments — some LE292 billion — are expected to come from the private sector, with the balance from public sector companies, investment authorities and a LE107 billion allocation from the treasury.

This, he said, will bring contribute to the governments goal of bringing unemployment down to 11.5 percent next year, from 12.8 percent at the end of 2015.

The budget should be sent for parliament to debate and for ratification by the president before coming into effectJuly 1, 2016.