Egypt's budget deficit edged up to 4.9 percent of the GDP in the first five months of the current fiscal year, compared to 4.4 percent in the same period last year, due to a surge in subsidies and debt service, showed the Ministry of Finance December bulletin. The financial monthly published on Tuesday showed that a LE34 billion ($4.34 billion) increase in revenues in the period from July to November 2015 was outweighed by a LE57.6 billion ($7.35 billion) rise in expenditures, leaving the deficit for the period with a LE30.6 billion ($3.9 billion) increase to LE138.5 billion ($17.7 billion). Egypt has been undergoing a fiscal reform programme since July 2013 with the aim of clenching on the ballooning budget deficit through new taxes and subsidy cuts. With more than 33 percent of all expenditure – driven by domestic obligations – debt service surged in the first five months of this year by 41 percent to LE96.3 billion ($12.3 billion) from LE68.4 billion ($8.7 billion). Subsidies and social benefits contributed a fifth to expenses with a 39 percent increase to LE60.6 billion ($70.7 billion) from LE43.6 billion ($5.6 billion). Wages and employee compensations, contributing almost a third of expenses, increased 6.261 percent in that period to almost LE85 billion ($10.9 billion) from LE79.6 billion ($10.2 billion). On the other hand, a hike in sales tax collections drove up tax revenues 23 percent to LE112.7 billion ($14.4 billion) from LE91.6 billion ($11.7 billion), showed the bulletin. Sales tax, which Egypt plans to replace by a value-added tax this fiscal year, saw the most collection, increasing 21 percent to LE51.6 billion ($6.6 billion) from LE43.4 billion ($5.5 billion). Egypt has budgeted the introduction of a value added tax for the current fiscal year, but the law is yet to be presented to the parliament. Grants from foreign governments in that period more than tripled to LE2.7 billion ($345 million). Egypt expects to shrink its deficit in fiscal year 2015/16 to 8.9 percent, down from 11.5 percent in 2014/15. source:Ahram Online
