#Egypt plans to cut budget deficit next year after missing target

Egypt will exceed its budget deficit target this year as a delay in enacting fiscal changes raises pressure for spending cuts, a government official said.
The deficit may reach 11.5 percent to 11.7 percent of economic output in the year that ends in June compared with 10.4 percent targeted earlier, Finance Minister El-Morsi Hegazi said today in an address to the upper house of parliament televised on state-run television. The government wants to reduce the gap in the 2013 to 2014 fiscal year to 9.6 percent of gross domestic product, according to a draft budget he presented.
Economic performance and growth “remain much below the minimum level” needed to generate jobs, Hegazi said. Despite “temporary positive effects” of increased government spending on economic activity, “it has become very difficult to maintain it” at the same level.
Egypt has been slow to implement reforms amid a political struggle between the Islamist government and the mostly secular opposition. That has depressed economic growth to about 2 percent annually compared with an average of 6.2 percent in the five years before the revolution that ousted Hosni Mubarak in 2011. The unrest forced the government to amend an economic program agreed upon with the International Monetary Fund in November, stalling a $4.8 billion loan.
Next year’s budget was built on the assumption that economic changes, such as widening the tax base and sales taxes and restructuring subsidies, would be enacted on time, Hegazi said. Not taking those steps may cause the government to exceed its forecast with a deficit of about 15 percent of economic output, he said.


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