Egypt’s Minister of Finance Amr El-Garhy said that his ministry aims to reduce the budget deficit to 4% by 2022, while continuing the economic reform programme, according to state-owned Middle East News Agency.
El-Garhy’s statement came on the sidelines of the launch event of the “system of tax returns, discount, and collection, with the activation of payment services and electronic signature,” which took place on Monday. He added that he expects Egypt’s economy to show a stronger performance during President Abdel Fattah Al-Sisi’s second term.
The Finance Ministry earlier announced raising its forecast for the budget deficit during the current fiscal year to between 9.5% and 9.7%.
According to the ministry’s statement, the improvement in curbing the total deficit to 4.4% of the GDP, from 5% in H1 2016/17, is due to the reduction of energy subsidies and increasing the value added tax (VAT) from 1% to 14%. Those developments led to an increase in revenue during H1 2017/18 by 38%, which exceeded the annual growth rate in general expenditure by 25%.
However, such improvements were weakened by the witnessed increase in social solidarity allocations, along with the 65% increase in commodity subsidies to account for EGP 23.3bn during H1 FY 2017/2018, after increasing the value of subsidies for owners of ration cards by about 140%. At the same time, cash support allocations for the Takaful and Karama social programmes increased by 141% to EGP 9.9bn.