CAIRO - The Egyptian Government has endorsed its budget for the coming fiscal year with a deficit forecast of LE140.3 billion ($23.4 billion). . The State budget for the fiscal year (FY) 2012/2013 is part of a five-year economic plan and was prepared by the interim Government led by Kamal el-Ganzouri and submitted to the Supreme Council of the Armed Forces (SCAF) for approval before being ratified by the Parliament Egypt's fiscal year begins on July 1. The process may take a few weeks, and the new president is highly likely to "throw Ganzouri's budget and plan into the dustbin", one analyst said. "I think the Government has made a budget out of duty, but everyone is aware that such a budget and plan will be scrapped anyway," said Hany Riyad, an analyst at the Cairo-based Financial and Legal Consultants Centre. Analysts say the mission of interim cabinets is to make short-term plans for less than one year and not propose long-term goals. "Ganzouri's cabinet won't survive until August. So how come it's planning five years ahead, for a future which will be decided by an elected president?" Riyad wondered. But irrespective of whether the Ganzouri-led cabinet should have prepared a five-year plan or not, the proposed budget "is not bad", according to Riyad. "Reducing the deficit has been a target to ease inflationary pressures and give a good image to the world, particularly the lenders. I don't know who will become president, but I think the budget deficit will be at the top of his priorities," Riyad said, referring to easing the deficit to 7.9 per cent in FY 2012/2013 from 8.6 per cent of GDP. Wages in the 2012/2013 State budget are expected to total LE136.6 billion, jumping by 16.3 per cent from LE117.5 billion in the previous year. Fuel subsidies are forecast to hit LE70 billion in FY 2012/2013, while government investments are expected to reach LE55.6 billion, a historic record high. Government investments totalled LE43 billion in the previous year. The rise in State investments intends to boost growth and push the economy ahead. Minister of Planning and International Co-operation Fayza Abul Naga said the budget along with the five-year plan target a growth of 4.0 to 4.5 per cent of the Gross Domestic Product (GDP). Investors, businesspeople, politicians and the man in the street are keeping their fingers crossed that the economy will get back on its feet after the presidential election this week. Egypt, which is seeking a $3.2 billion financial facility from the International Monetary Fund (IMF), lost around $21 billion of its foreign reserves in the past 16 months. The reserves stood at $15.21 billion at the end of April. They hit $36 billion in December 2010. On Thursday, David Hawley, the Deputy Director of the IMF's External Relations Department, said the Fund had not yet fixed a time for the $3.2 billion loan to Egypt and dismissed reports that the deal would be signed in June. Earlier, the semi-official Al-Ahram daily Arabic newspaper said Egypt would sign a $3.2 billion loan with the IMF at the beginning of June. Gerry Rice, IMF Director of External Relations, said: "The Egyptian economy faces a challenging situation. We are ready to help and support a programme that strengthens macroeconomic stability, that has broad political consensus and protects vulnerable groups. That's the discussion we're having right now with the Egyptians vis-a-vis their economy."
