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Significant changes in FY 2015/2016 budget revenues Estimation of Suez Canal revenues similar to last year, despite completion of new Suez Canal project
Egypt's economic scene altered after the inauguration of President Abdel Fattah Al-Sisi in July 2014, with the changes significantly apparent in comparing the new fiscal year (FY) 2015/2016 state budget with the previous budget. Revenues estimation of certain sections in the budget has increased on a yearly basis, including the Central Bank of Egypt (CBE), revenues of mines, return on cement and steel licences, lands selling and public economic corporations' revenues. Other sections are expected to suffer a decrease in revenues, such as mobile phone licences, the Egyptian General Petroleum Corporation's (EGPC) surplus in profits, and value of interests to be collected. The Ministry of Finance estimated the targeted total deficit in the new state budget for FY 2015/2016 at EGP 251bn. This represents 8.9% of gross domestic product (GDP), instead of EGP 281bn, or 9.9%, in the first draft. The general revenues of the new fiscal year's budget are expected to grow by 28%, amounting to EGP 622.2bn, compared to EGP 486bn for the current fiscal year. The total expenditures amounted to EGP 864bn, with an increase rate of 17.4%, while expenditure on employees' wages and compensation and debt services, grants and social benefits, amounted to 80.2% of expenses. The most significant changes that have appeared includes a surplus in the profit of the Egyptian General Petroleum Corporation (EGPC) in the new budget was marked at EGP 29bn, 32% less than FY 2014/2015 budget where surplus was estimated at 42.7bn. This contradicts the fact that the EGPC has tax arrears that amount to EGP 35bn, collectively with the Suez Canal and the CBE, according to Tax Authority Head Abdel Moneim Matar. Estimated revenues of the special funds and accounts have increased from EGP 13.8bn in FY 2014/2015 to EGP 19.1bn in the current fiscal year. Revenues in return for steel and cement licences are expected to increase in the new fiscal year to EGP 3.2bn compared to EGP 100m in FY 2014/2015. Head of the Chamber of Metallurgical Industries Mohamed Hanafy commented that the government has the intention to increase the number of cement factories. However, Hanafy believes that the licences will not increase given the energy shortage issue and that the currently existing factories cannot operate with their full capacity. This viewpoint was the government's approach until last April, when the Ministry of Industry and Foreign Trade imposed protection fees on imported rebar steel, at a percentage of 8% for one tonne, or no less than EGP 408 per tonne. The decision will last for three years, with the first years' protection rates amounting to the prior mentioned fees. The following year, they will reach EGP 325 per tonne, and the year after they will stand at EGP 175 per tonne. Estimation of the surplus in profits of the Suez Canal Authority in FY 2015/2016 was set at EGP 19.6bn, with %2.6 from EGP 19.1bn in FY 2014/2015 budget. The Ministry of Finance said that the estimation was identified according to the assessment of traffic fees associated with the movement of international trade crossing the Suez Canal in the current fiscal year. The minimal increase comes despite the launch of the new Suez Canal project in August. Upon completion, the project was supposed to see canal revenues increase by 259%, up from current annual revenues of $5bn, according to head of the Suez Canal Authority Mohab Memish. The Ministry of Finance pointed out that it will reprioritise its spending towards the improvement of general services. Approximately 50% of government spending will be allocated to support programmes that seek "direct social protection". Volumes of money allocated to cash subsidies, healthcare and pensions have all increased, the ministry clarified. The Ministry of Finance, in coordination with the CBE, said in late June that it intended to borrow EGP 262bn to fund the budget deficit in the first quarter (Q1) of FY 2015/2016. The ministry's plan outlined that the government is looking to issue treasury bills worth EGP 189.5bn, and treasury bonds worth EGP 72.5bn in the period between July and September 2015.
