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Tuesday, 11 February 2020

Egypt’s gov’t records budget deficit of 3.8% in 1H2019-20- report

BUDGET WATCH- Gov’t records budget deficit of 3.8% in 1H2019-2020: The Finance Ministry’s semi-annual fiscal performance report showed a budget deficit of EGP 236.7 bn (3.8% of GDP) in the first half of FY2019-2020, compared to EGP 186.7 bn (3.6%) in July-December of FY2018-2019. Revenues for the period came at EGP 390.1 bn, up slightly from EGP 388.3 bn in 1H2018-2019. The ministry recorded a primary deficit of EGP 30.5 bn (0.05% of GDP) in the first six months of the fiscal year, stripped of interest payments. The ministry expects to record an overall deficit equal to 7.2% of GDP by the end of the fiscal year.

Expenses, meanwhile, increased to EGP 621.7 bn, up 8.4% y-o-y from EGP 573.3 bn in 1H2018-19. This was driven by an increase in the interest bill to EGP 267.2 bn from EGP 207.5 bn during the period.

Line items on which the state spent more: Government spending on health, the new universal healthcare program, education, and commodity subsidies increased during the first half of the current fiscal year, according to a ministry release.

Energy subsidy spending, however, was slashed by 67% during the period to reach EGP 9.88 bn, from EGP 30.17 bn in 1H2018-2019. These cuts made room for higher health and education spending. The government increased subsidized fuel prices last summer by between 16-30% to get the prices of most petroleum products to now reflect their actual cost. Electricity prices were also raised by a 15% average at the start of the fiscal year. Reuters took note of this part of the story.

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