El Garhy to testify on Sunday — is a new income regime hike in the works? The House Economics Committee has called Finance Minister Amr El Garhy to testify on Sunday about the impact on the state budget deficit of last Thursday’s float of the EGP, the 300bps interest rate hike and rising fuel prices, Al Borsa reports. Committee member Yasser Omar expects the 300 bps increase in interest rates will increase debt service burden to EGP 400 bn, driving the budget deficit to 14% this year from both a revised target of 9.8% and the government’s original budget of 9-9.5% (see page 4 of the original budget document, pdf, Arabic). Another committee member tells the newspaper that the government may be forced to push through a progressive tax bill to help close the gap.

Speaking of the finance ministry, the quarterly budget deficit fell from 2.8% to 2.4% in 1Q2016-17, unnamed government sources told Reuters. “The total deficit for the first quarter of the year was around EGP 76.816 bn from EGP 78.280 bn a year earlier,” one of the sources said. Both sources confirmed the government debt service to EGP 57.189 bn from EGP 50.704 bn a year earlier, but subsidies, grants and social benefits costs fell to EGP 32.094 bn from EGP 37.942 bn.