CAIRO: Minister of Planning and International Cooperation Ashraf al-Araby announced on Monday that the government is being forced to borrow from Egypt’s operating banks to cover the budget deficit and provide money liquidity for citizen needs, Youm7 reported.
The budget deficit, along with borrowing, has led to an increase in prices, a rise in inflation, a decline in the credit rating and shrinking investments, he said, confirming the need to overcome the budget deficit and end borrowing.
“Beside the rise in inflation, decline in the credit rating and shrinkage in investments, the budget deficit and borrowing effect national development, when most governmental expenses go to repay loans,” Alia al-Mahdi, former dean of the Faculty of Economics and Political Science at Cairo University, told The Cairo Post.
Following the ouster of President Hosni Mubarak during the January 25 Revolution, Egypt has faced major economic troubles and harsh fluctuation that have forced the country to borrow from banks to cover the budget deficit.
Governmental borrowing also effects infrastructure and developmental projects, Mahdi said, reducing the government’s carrying out of many infrastructure projects. The government should find a solution to its excessive borrowing, she added.
During the fiscal year 2012 to 2013, the budget deficit totaled more than 240 billion EGP, said Minister of Finance Hany Kadry, according to Youm7. By the end of the current fiscal year, 2013 to 2014, the budget deficit is expected to total 200 billion EGP, he said.
In the last quarter of the current fiscal year, the government is scheduled to borrow about 205 billion EGP in short and long-term borrowing to provide the needed liquidity for governmental expenses, according the ministry’s schedule of government securities.