Total deficit retreats to 4.4% of GDP in the first half of the current fiscal year

LE 42.5 billion in total spending on wages and employee compensation at a growth rate of 12%

Essential commodity...

  Total deficit retreats to 4.4% of GDP in the first half of the current fiscal year LE 42.5 billion in total spending on wages and employee compensation at a growth rate of 12% Essential commodity subsidizing program unaffected by current events Indicators of the general budget performance in the first half of the current fiscal year show local economy is able to stand the losses resulting from the recent events and to cover a spending hike caused by compensation to parties that suffered damages in the wake of events. However, Egyptian Finance Minister Dr. Samir Radwan emphasises the importance of restoring normalcy in economic activities so that the national economy can absorb the economic and financial losses inflicted by recent developments which have brought the economy and the general and financial institutions to a near standstill. The ratio of state general budget deficit to GDP has been continuously retreating in the period from July to December of the current fiscal year, with the total deficit scoring around LE 60.4 billion at 4.4% of GDP, retreating by 0.4% compared to the first half of the previous fiscal year. The primary rate of deficit, less the interest on general loans, has recorded a slightly lower value at 1.8% of GDP, compared to 2% in the same period of the previous year. A Ministry of Finance report attributes this improvement in the performance of the general budget to a remarkable rise in the general revenues by 5.3%, achieving LE 99.7 billion in the first six months of the current fiscal year, compared to LE 94.7% in the same period of the previous year. As for public spending, the report reveals that total public expenditure in the first half of the current fiscal year rose by 5.7% to LE 161.1 billion, compared to LE 152.4 billion in the same period of the previous year. The rise in public expenditure is attributed by the report to an increase in the bill of wages and compensations for employees by 11.7% to LE 42.5 billion in the first six months of the current fiscal year, compared to around LE three billion in the same period of the previous year. In addition, interest payments rose by 7.4%, recording around LE 35.7 billion. Subsidies, grants and social benefits rose as well by 5.4% to LE 41.6 billion. In contrast, spending on goods purchase and services decreased by 3.9% to LE 9.3 billion, while spending on public investment went down by 11.3% to LE 16.3 billion.  Dr. Radwan revealed that the Ministry of Finance made available within the last few days the financial resources required to secure the availability of essential and staple goods for the public, fending off any negative impact of the recent events locally and internationally. A total tax revenue rise by 14.9%, the report reveals, has been achieved through a rise in collection of taxes on income and capital profits by 22.1% to LE 30 billion in the first half of the current fiscal year (2010/2011), compared to LE 24.5 billion in the same period of previous year, in addition to a rise in sales tax revenues by 12.5% to LE 33.8 billion in the first half of the current fiscal year, compared to around LE 30.1 billion in the equivalent period of the previous year. There was as well a rise in the collected property taxes by 11.4% to LE 4.6 billion, compared to LE 4.1 billion in the equivalent period of 2009/2010. Customs revenues also displayed a rise of around 3.3% to LE 6.9 billion. The report also reveals that the rise in the tax revenues balanced the decrease in the non-tax revenues by 16.3% which resulted from the retreat of the return of the state’s ownership of companies and public establishments. These channelled their surplus profits to the state treasury in the first half of the current fiscal year at 26.4%, achieving LE 14.1 billion, compared to LE 19.2 billion in the equivalent period of the previous fiscal year. In addition, revenues accumulated from selling goods and services went down by 4% to around LE 5.1 billion, while miscellaneous revenues rose by 13.2% to LE 2.7 billion. Grants as well displayed a rise by 9.4% to LE 2.1 billion. (Source: Ministry of Finance)