Deficit reached 10.8 percent of GDP in May

Eleven months into the 2014/15 fiscal year, Egypt’s budget deficit hit 10.8 percent of GDP, the Finance Ministry reports. Earlier this month, the ministry projected that Egypt’s full-year deficit would also reach 10.8 percent

It is possible that the country could maintain the same deficit-to-GDP ratio for two months in a row, but it would run counter to precedent. The country’s deficit grew steadily throughout the fiscal year, reaching 9.9 percent of GDP at the end of May.

After a last-minute intervention by President Abdel-Fattah al-Sisi, the 2014/15 budget called for a deficit of LE240 billion, equivalent 10 percent of GDP. The initial 2014/15 draft budget projected a deficit LE288 billion, or 12 percent of GDP.

As of the end of May 2015, the deficit stood at LE261.8 billion, according to Ministry of Finance calculations.

At the same time in 2013/14, the deficit stood at LE189.4 billion, or 9.4 percent of GDP. That year closed with a fiscal deficit exceeding LE255 billion, or 12.8 percent of GDP, according to the Finance Ministry.

Final figures for the 2014/15 fiscal year, which ended in June, have not yet been made available. However, the July-May figures suggest general trends.

Total revenue for the 11 months from July to May—including taxes, grants and income from state-owned entities—hit LE350 billion, about 64 percent of the LE548.6 billion anticipated in the 2014/15 budget.

Tax revenues reached LE261 billion at the end of May, slightly less than 72 percent of the LE364.3 billion projected for the full fiscal year.

Last week, Egypt’s tax authority announced a year-end total of LE267 billion in tax revenues; as Ahram Online notes, this has not prevented the Tax Authority from claiming it collected 90 percent of targeted revenue for the year

Expenditure also appears to be coming in below projections. By the end of May, the government had spent LE601.4 billion, slightly more than 76 percent of the projected year-end-total of LE789 billion. However, lower-than-expected outgoings have not been enough to counterbalance low state revenues.

Without a dramatic increase in revenue in June, the year-end deficit looks likely to be closer to the LE288 billion predicted in the 2014/15 draft budget than it will be to the LE240 billion Sisi requested before approving the final budget.

This year, Sisi sent back a draft budget calling for a 9.9 percent budget deficit, only signing the budget into law when the anticipated deficit had been reduced to 8.9 percent of GDP or LE251 billion.