7 Things we know about Egypt's 2015/2016 budget
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President AbdelFattah El-Sisi has recently ratified Egypt's 2015/2016 budget. after being approved by the cabinet in mid June.
The Egyptian fiscal year starts on the 1st of July and ends on 30 June. The cabinet had sent to the President who had to ratify it due to the absence of the parliament. El-Sisi demanded some amendments especially regarding the estimated budget deficit.
Here are the main featured that were announced about the new budget:
1- Deficit:
The targeted estimate of the total deficit in the new budget of the Fiscal Year 2015/2016 stood at EGP 251 bn representing 8.9% of the GDP. The initial estimate that was made in the first draft of the budget was 9.9% or EGP 281 bn, but the President suggested amendments to the budget. The government intends to fund the deficit in the first quarter of the new fiscal year by borrowing EGP 262 bn according to a plan set by the Finance Ministry and the Central Bank.
2- Debt:
The domestic public debt of Egypt is estimated to represent 83.5% of the GDP in the new budget while the external public debt stands at 6.5% of GDP. The debt interest total for foreign and domestic loans increased 25.1% to reach EGP 244bn which represents 28% of the total public expenditure.
3- Expenditure:
The total increased with a rate of 17.4% to reach EGP 864 bn. Spending on wages, employee compensation, grants, debt services and social benefits reaches 80.2% in the new budget as public sector wages expected to record a 14% growth. The budget also includes a 12% increase in spending on social programs to reach EGP 431 bn. Spending on public investment increases to EGP 75 bn and although this represents a 66% increase in investment expenditure this only amounts to almost 9% of the overall expenses.
4- Revenues:
The total revenues of the new fiscal year are expected to amount to EGP 622.2 bn, recording a 28% increase. Expected revenue from taxes is EGP 422 bn, while tax income from international trade is expected to increase by 24.8% reaching EGP 29.6 bn. The government cancelled several taxes that could have boosted the new budget, like the capital gains tax that was put on hold for 2 years. Other measures the country disregarded were the increase in electricity prices and the increase in the income tax that was lowered instead by the government. EFG-Hermes had stated that the disregard of these measures can cost the government about EGP 10 bn.
5- Growth:
The Ministry of Finance expects a 5 percent growth in the new fiscal year compared to 4.25 percent in the previous one.
6- Subsidies:
The new budget designated EGP 61 bn for fuel products’ subsidies, 31.1 bn to electricity subsidies and EGP 38.4 bn for subsidies on commodities and bread.
7- Grants:
The projected grants in the 2015/2016 budget stand at EGP 2.2bn from benefactors down from EGP 25.7 bn last year.
The Egyptian fiscal year starts on the 1st of July and ends on 30 June. The cabinet had sent to the President who had to ratify it due to the absence of the parliament. El-Sisi demanded some amendments especially regarding the estimated budget deficit.
Here are the main featured that were announced about the new budget:
1- Deficit:
The targeted estimate of the total deficit in the new budget of the Fiscal Year 2015/2016 stood at EGP 251 bn representing 8.9% of the GDP. The initial estimate that was made in the first draft of the budget was 9.9% or EGP 281 bn, but the President suggested amendments to the budget. The government intends to fund the deficit in the first quarter of the new fiscal year by borrowing EGP 262 bn according to a plan set by the Finance Ministry and the Central Bank.
2- Debt:
The domestic public debt of Egypt is estimated to represent 83.5% of the GDP in the new budget while the external public debt stands at 6.5% of GDP. The debt interest total for foreign and domestic loans increased 25.1% to reach EGP 244bn which represents 28% of the total public expenditure.
3- Expenditure:
The total increased with a rate of 17.4% to reach EGP 864 bn. Spending on wages, employee compensation, grants, debt services and social benefits reaches 80.2% in the new budget as public sector wages expected to record a 14% growth. The budget also includes a 12% increase in spending on social programs to reach EGP 431 bn. Spending on public investment increases to EGP 75 bn and although this represents a 66% increase in investment expenditure this only amounts to almost 9% of the overall expenses.
4- Revenues:
The total revenues of the new fiscal year are expected to amount to EGP 622.2 bn, recording a 28% increase. Expected revenue from taxes is EGP 422 bn, while tax income from international trade is expected to increase by 24.8% reaching EGP 29.6 bn. The government cancelled several taxes that could have boosted the new budget, like the capital gains tax that was put on hold for 2 years. Other measures the country disregarded were the increase in electricity prices and the increase in the income tax that was lowered instead by the government. EFG-Hermes had stated that the disregard of these measures can cost the government about EGP 10 bn.
5- Growth:
The Ministry of Finance expects a 5 percent growth in the new fiscal year compared to 4.25 percent in the previous one.
6- Subsidies:
The new budget designated EGP 61 bn for fuel products’ subsidies, 31.1 bn to electricity subsidies and EGP 38.4 bn for subsidies on commodities and bread.
7- Grants:
The projected grants in the 2015/2016 budget stand at EGP 2.2bn from benefactors down from EGP 25.7 bn last year.