Budget deficit lower in first half of financial year, says Nazif

CAIRO: The Egyptian government cut its budget deficit to LE 3.9 billion in the first half of the 2006/7 financial year, Prime Minister Ahmed Nazif told parliament on Tuesday. Nazif also said that the Egyptian economy grew 6.8 percent during the same July-December period. Nazif said last month that the economy had been growing at 7 percent and should expand by 7.5 percent in 2007 as a whole. He said the budget deficit was a decline from LE 11.2 billion but did not say whether that was the figure for the first half of 2006 or the second half of 2005. The cabinet said in November that the budget had a surplus of LE 3 billion in the July-September quarter of the 2006/7 financial year, which started on July 1, compared with a deficit of LE 7.8 billion in the same period of the previous year. Boutros-Ghali said then that the extra receipts came from general revenue such as taxation and from windfall gains through privatization deals, such as the sale of the Bank of Alexandria. Nazif said on Monday that the government had been able to cut the deficit because revenue had increased 42 percent to LE 11.3 billion. He did not state the comparative period. The size of the budget deficit, which was running at about 8 percent of gross domestic product (GDP) for the last two years, had been of concern to economists and investors because it pushed up domestic interest rates and divert potential investment funds from productive projects. The focus of attention has shifted to consumer price inflation, which rose to 12.4 percent at the end of January from a low of 3 percent in October 2005. Nazif said that inflation had started to fall but gave no statistical details. The January rate was unchanged from the rate at the end of December.