Egypt expects its budget deficit to be 10.4 percent of gross domestic product in the financial year ending June 2013, coming in below the 11 percent or so it reached in 2011/12, a minister said on Saturday.
The figure of 10.4 percent is well above the 8 percent or so originally forecast for 2012/13, but economists and government officials had said the original estimate was optimistic as it was based on austerity measures that have yet to be taken.
Planning and International Cooperation Minister Ashraf al-Araby outlined the new 10.4 percent forecast for the deficit this year at a news conference and repeated the government’s plan to rein the deficit in to 8.5 percent in 2013/14.
Egypt said it had agreed with the International Monetary Fund to cut back the deficit in talks that ended this week in Cairo and which that led to a preliminary deal for a $4.8 billion IMF loan to support the battered economy.
Egyptian officials had put the 2011/12 budget deficit at 11 percent. Prime Minister Hisham Kandil told Reuters this week it was 10.8 percent and said Egypt would issue a supplementary budget to amend the 2012/13 budget after any IMF deal.
Among measures planned are steps to curb spending on fuel subsidies, which includes terminating subsidies on 95-octane fuel, the highest grade available, and introducing quotas in April for drivers to buy lower grades at subsidized prices.
Drivers currently pay well below real costs for their fuel, which is a big drain on state coffers.
Araby also announced Egypt, a gas producer and exporter, would start importing gas in the second quarter of 2013, running April to June, a move that may help Egypt meet its own export contracts while domestic demand rises.
Egypt said in October it had agreed to import Algerian gas and was in talks with Qatar for a similar deal.
Egypt has two liquefied natural gas (LNG) plants and a pipeline to export gas, but energy industry sources say the government has been diverting some gas contracted for export to the domestic market, which suffered fuel shortages and electricity cuts in the summer.