Egypt gov't deficit soars in seven months to end Jan - MENA

Two years of political turmoil has battered state finances by driving away foreign investors and tourists
By Reuters
Wed 27 Feb 2013 05:50 PM

Egypt's government deficit rose by more than a third in the seven months to the end of January from the same period a year earlier, state media reported on Wednesday.

Two years of political turmoil has battered state finances by driving away foreign investors and tourists, and a sharp fall in the Egyptian pound has pushed up the cost of subsidies for imported energy and food.

The deficit hit EGP119.8bn (US$17.8bn) in the first seven months of the fiscal year, which begins in July, compared with EGP88.2bn a year earlier, the state news agency MENA said.

Citing a finance ministry report, it said the figure equalled 6.7 percent of annual gross domestic product (GDP).

In a revised economic reform plan, the government said it is targeting a deficit for the whole financial year to June of EGP189.7bn, or about 10.9 percent of total economic output. However, this factored in economic reforms and it forecast the deficit would hit 12.3 percent of GDP without action.

Cairo has said it will reopen negotiations early next month on a US$4.8bn loan from the International Monetary Fund to bolster its finances. Foreign currency reserves have also fallen to critical levels.

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