Back to the complete issue
Tuesday, 6 September 2016

Budget deficit at 11.2% of GDP in the first 11 months of FY2015-16, real estate a star performer

Egypt’s budget deficit stood at 11.2% of GDP for the first 11 months of FY2015-16, Reuters reported. An earlier version of the piece quoted a Planning Ministry report (73-pp pdf, in Arabic) as saying that the deficit for the first nine months was at 9% of GDP, a percentage unchanged from the similar period in FY2014-15.

Among the main takeaways of the report is the projection that in order for the government to meet its targeted 4.4% annual growth rate, GDP has to grow by an annualised 5% in 4Q2015-16 — which is unlikely given the evidence from the quarter’s PMI reports. The World Bank is only projecting an annual growth rate of 3.3% in FY2015-16, which the Planning Ministry says fails to take into consideration the growth in indirect taxes and the decrease in subsidies.

In the first nine months of FY2015-16, Egypt’s fastest-growing sectors were construction and real estate, ICT, and government spending. Conversely, extractive industries (oil and gas, mostly) and tourism contracted the most. Most investments were directed towards the Suez Canal, followed by construction and real estate and ICT — with a marked investment contraction seen in extractive industries. For comparison, investment in construction and real estate grew by 11.1% y-o-y in 9MFY2015-16, whereas investment in extractive industries dropped by 19.8% y-o-y in the similar period, driven by an 11.2% y-o-y decline in investment in natural gas extraction.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.