Budget deficit widens Egypt's budget deficit during the first seven months of fiscal year 2014-2015 rose to 6.9 per cent of GDP, reaching LE159 billion. This is a marked increase from the budget deficit of LE119.6 billion, the equivalent of six per cent of GDP, during the same period a year earlier. The rise comes on the back of a decline in grants and taxes on corporate profits. According to the Ministry of Finance's February monthly statistical bulletin, revenues of LE187.7 billion were collected while expenditure reached LE337 billion during the period of July to January 2014-2015. The bulletin said that the decline in revenues is mainly attributable to the decline in the “exceptional grants” received during the same period the year before. The grants came in at LE7.9 billion between July and January of 2014-2015, as compared to LE37.3 billion during the same period the year before. Revenues were also affected by a 14.3 per cent decline in tax revenues. This was the result of a drop in taxes on corporate profits as no petroleum company tax settlements were made during the period. According to the bulletin, the decline “outweighed the increase in sales tax revenues, taxes on international trade and property taxes.” On the expenditure side, the increase was mainly driven by spending on “social programmes, the minimum wage, increased social solidarity pensions and efforts to increase public investments to develop and modernise infrastructure,” it said. The government is targeting a 10 per cent of GDP budget deficit for fiscal year 2014-2015. Recent indicators show growth increased to 6.8 per cent in the first quarter of 2014-2015, compared to the same period the year before. According to the bulletin, the increase underscores “the capacity of the economy to respond favourably when political and policy conditions stabilise and provide the basis for an economic take-off.” It said the growth was “driven mainly by the performance of public and household consumption, investments and exports of goods and services.” AAIB acquires Scotiabank Egypt operations The Arab African International Bank (AAIB) this week concluded an agreement to acquire the loan and deposit portfolio of the Bank of Nova Scotia (Scotiabank) in Egypt. AAIB will also acquire the Canadian bank's trade finance portfolio. Scotiabank is Canada's most international bank, with more than 3,000 branches and offices in some 50 countries. “As part of this agreement, AAIB will also serve as Scotiabank's preferred correspondent bank in Egypt serving our global customers doing business in the country,” said Firdos Somji, a Scotiabank official, in a press release. AAIB Managing Director Hassan Abdalla said the deal will “help establish new territories to augment our international business.” He also said that AAIB will hire the majority of Scotiabank staff members. The Central Bank of Egypt (CBE) and the Kuwait Investment Authority (KIA) are the core of AAIB's shareholder base. The bank was established by a special law as a joint venture between the CBE and the KIA and was incorporated in 1964 as Egypt's first Arab multinational bank, with each party holding a 49.37 per cent stake.
