Oct. 28 (Bloomberg) -- Finance Minister Youssef Boutros-Ghali said government plans to spend an additional 10 billion pounds ($1.8 billion) would not increase the deficit target as any extra funds would be off-budget.

“The budget target is not changed,” Boutros-Ghali said in a statement today responding to questions from Bloomberg News. “Additional spending is by economic authorities out of their own resources,” he said without elaboration.

The government will request parliamentary approval for additional spending on water and wastewater projects, senior ruling party official Gamal Mubarak, the son of President Hosni Mubarak, said on Oct. 19. State-owned institutions such as the railways, the Suez Canal authority and oil companies, are allowed to spend funds outside of the central government’s budget.

The Finance Ministry has said it was targeting a deficit of 8.4 percent in the fiscal year through June 2010, compared with 6.9 percent a year earlier.

EFG-Hermes Holding SAE, the country’s largest publicly traded investment bank, is forecasting a budget deficit of 8.3 percent and an economic growth rate of 4.5 percent.

“If growth is better than that, you might see higher taxes which would mean a narrower deficit,” Simon Kitchen, senior economist at the bank, said.

The government has said it expects the economy of the most populous Arab country to expand more than 5 percent this year, as revenue from tourism and foreign direct investment recover. The economy grew 4.7 percent in the year that ended in June.

(Source: Bloomberg)