Finance ministry expects budget deficit to be 9.1% of GDP in fiscal year 2013/14, down from 13.8% in 2012/13.

Egypt's budget deficit is expected to be LE186 billion – 9.1 percent of GDP – in fiscal year (FY) 2013/14, down from 13.8 percent in 2012/13, according to the finance ministry's August report.

The report published on Sunday revealed that real GDP grew by 2.3 percent in the first nine months of FY 2012/13, compared to 1.8 percent year-on-year. The report showed the higher growth rate was due to an increase in public consumption and a significant growth in exports.

In addition, public domestic debt reached 83.4 percent of GDP by the end of FY 2012/13, amounting to LE1.44 trillion compared to 74.9 percent of GDP, amounting to LE1.26 trillion year-on-year.

As a result, domestic debt service increased by almost 66.1 percent to reach LE203.2 billion at end of June 2013, compared to LE122.3 billion during the same period last year.

Preliminary actual outcomes of FY 2012/13 show the budget deficit was 13.8 percent of GDP, mainly due to an increase in expenditures which grew by 23.7 percent to LE582.7 billion, compared to LE471 billion last year. The increase is attributed to growth in the three main expense items: compensation for public employees, an increase in interest payments, and an increase in subsidy grants and social benefits.

Finance Minister Ahmed Galal said in a statement on Sunday that the interim government was targeting three main goals: stimulating the economy, achieving social justice, and reaching economic stability through fiscal regulation.

Galal said he expected to reach those goals through reforming state institutions over the mid- and long-term

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