CAIRO: Minister of Finance Hany Kadry announced on Monday that Egypt’s budget deficit is expected to hit between 14 to 14.5 percent of the gross domestic product (GDP) by the end of the current fiscal year, totaling between 340 to 350 billion EGP, which exceeds the ministry’s expectations, New Today reported.
During a phone call with the CBC channel, Kadry decreased his expectations regarding the targeted growth rate, saying it will fall between 2 to 2.5 percent, compared to the 3 to 3.5 percent that the ministry had announced last March, New Today reported.
The Ministry of Finance had claimed last March that it would decrease the budget deficit to between 10 to 10.5 percent of the GDP. Kadry said the ministry will take on new reform measures including widening the tax base, increasing investments and rationing the state-subsidy program to control the budget deficit, Al-Ahram reported.
During the phone interview, Kadry announced that the ministry has drafted the final draft of Egypt‘s budget for the upcoming fiscal year 2014-2015, pointing out that the ministry took into account economic reform to increase its financial revenues, New Today reported.
Such financial reforms will include imposing additional taxes, worth 5 percent, on the wealthy who earn more than 1 million EGP yearly, and increasing governmental revenues, along with replacing sales taxes with a comprehensive value added tax in order to control the budget deficit, it reported.
The Ministry of Finance’s official statistics showed a 53.8 percent increase in governmental borrowing during the first half of the current fiscal year, worth 486.7 billion EGP.
Despite the growing deficit in the budget, the 2014 constitution obligates the government to increase spending on health, education and scientific research to 10 percent of the country’s gross national product (GNP) in the next three years, The Cairo Post previously reported.
Expenditures in the health and education sector will rise to 140 billion EGP annually for three successive years in the new budget, Kadry said.