Egypt's cabinet approved on Wednesday the draft budget for the coming fiscal year (2017/18), targeting an overall deficit of 9.1 percent of the Gross Domestic Product (GDP). The budget deficit is projected to amount to EGP 370 billion and the primary deficit to register EGP 11 billion for first time since 2011. The draft will be presented to President Abdel-Fattah El-Sisi for ratification before it is presented to parliament. The new budget amounts to EGP 1.2 trillion and expects EGP 818 billion in revenue, finance minister Amr El-Garhy said in a press conference. The government is targeting a budget deficit of 10.1 percent by the end of the current fiscal year (2016/17). The state subsidy bill in 2017/18 is estimated at EGP 385 billion, up from EGP 285 billion in the current fiscal year, El-Garhy told Al-Ahram daily in an interview last week. El-Garhy said that the bill includes food subsidies and social safety network initiative Takaful and Karama. Egypt freely floated its currency against the dollar last November as part of a fiscal reform programme implemented in mid-2014 to curb a growing state budget deficit, which amounted to 12.2 percent in 2015/16, and revive the flagging economy. The reform programme also included cutting subsidies and implementing new taxes including a value added tax. The programme was endorsed by the International Monetary Fund, which approved in November a $12 billion loan to Egypt, of which the central bank has received $2.75 billion so far. Egypt's foreign reserves rose to $26.541 billion by the end of February 2017 from $26.363 billion in January, according to the central bank.
