Egypt's budget deficit fell to LE11.5 billion ($2 billion) in July from LE14.8 billion in the same month a year ago, Minister of Finance Youssef Boutros Ghali has said. “Indicators of the State budget show that the economy has recovered from the global downturn, and has started to pick up,” Ghali said. Revenues jumped by 12 per cent to LE11 billion in July, against LE9.9 billion in the same month the previous year, according to Ghali. “Sales tax receips rose by 15.3 per cent to LE4.3 billion in July, compared to LE3.7 billion in the same month a year ago. Customs duties totalled LE1.2 billion,” he said. According to him, the Government's public spending fell by 8.1 per cent to LE22.7 billion in July, against LE24.7 billion in the same month a year earlier. Spending on subsidies plunged by 25.2 per cent to LE2.8 billion in July, against LE3.7 in the same month a year ago, he said. Domestic debt rose to LE574.2 billion in July, accounting for 47.9 per cent of gross domestic product (GDP), from LE467.1 billion in July 2009, he added. Egypt's balance of payments performed fairly well in the first nine months of FY 2009/2010, running an overall surplus of $3.1 billion, against an overall deficit of $2.3 billion in the previous corresponding period, the Central Bank of Egypt (CBE) said in statement. “The improvement reflects a 24 per cent contraction in the current account deficit, to stand at $2.6 billion, against $3.4 billion a year ago, under the aggravation of the global financial crisis,” the CBE said. Net foreign reserves at the CBE totalled $35.27 billion at the end of July, according to the CBE. Remittances from Egyptian expatriates rose to the highest level in at least two years in the second quarter this year, helping narrow the country's current account deficit, according to the CBE. The remittances surged to $3.2 billion, a 78 per cent jump from the same quarter a year earlier. Remittances rose by 25 per cent to $9.5 billion in FY 2009/2010. More than half of the transfers are sent by Egyptian workers in Gulf Arab countries, mainly Saudi Arabia. The money helped boost consumer spending, which remains the backbone of the country's economic growth, according to Bloomberg. Egypt's economy expanded 5.3 per cent in the 12 months through June, up from 4.7 per cent in the previous fiscal year. Egyptian workers began flooding into the Arab Gulf in the 1970s to look for jobs, benefiting from a spending spree on infrastructure projects in those countries during a period of high oil prices. The Saudi economy excluding oil may expand 4.5 per cent in 2010 according to the International Monetary Fund, compared with 3.3 per cent in the previous year. The labour-importing economies of Kuwait, Qatar, the United Arab Emirates and Bahrain are also projected to grow this year, according to IMF forecasts. Egypt's trade deficit was stable at $25.1 billion, the CBE said in the statement. Tourism revenue rose 10.5 per cent to $11.6 billion. Overall, the current account deficit narrowed 2.4 per cent to $4.3 billion in FY 2009/2010. Foreign direct investment into Egypt also surged to $2.5 billion between April and June, the highest quarterly level in the fiscal year, the Central Bank said. Investments for the entire year fell 17 per cent to $6.8 billion. Net portfolio investments registered inflows of $7.9 billion for the year, compared with an outflow of $9.2 billion in the previous 12 months. About $5 billion of the portfolio investments were in treasury bills, the CBE said. The Egyptian pound has lost 3.8 per cent against the US dollar this year, according to data compiled by Bloomberg.
