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Tuesday, 7 April 2020

FinMin expecting EGP 974 bn in tax revenues for draft FY2020-2021 budget

BUDGET WATCH- The Finance Ministry is aiming to collect EGP 974 bn in tax revenue in the coming fiscal year, according to its draft FY2020-2021 budget, the local press reports. This would mark a 13.7% increase from the EGP 856.6 bn the ministry expects to collect during the current fiscal year.

But doubts are being cast on whether these figures are realistic: Hossam Nasr, partner at Ernst & Young, said that the revenue targets are unattainable in the current environment as key sectors such as tourism, aviation, oil, and real estate face losses due to the covid-19 pandemic. Unnamed parliamentary sources said meeting these targets would require a swift resolution of the pandemic as exports, sales, and VAT yields drop.

The FY2020-2021 budget — what we know so far: The tax figures come a week after Finance Minister Mohamed Maait revealed new details about the government’s fiscal targets for the year ahead. Government spending is due to rise 9% to EGP 1.71 tn, with health, education, welfare and investment allocations due to rise substantially. Total revenues are expected to increase to around EGP 1.3 tn, up almost EGP 200 bn on last year. The ministry believes it can cut the budget deficit down to 6.3% of GDP from 7.2% projected for the current fiscal year, and is using a benchmark oil price of USD 61/bbl for its calculations.

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