Greater spending forecast for 1995

PUBLISHED : Saturday, 23 July, 1994, 12:00am
UPDATED : Saturday, 23 July, 1994, 12:00am

HIGHER spending and improved tax revenues have been forecast in Egypt's budget for the next financial year.

Presented two months ago, budget estimates show that spending will increase by nearly eight per cent in the fiscal period 1994-95.

Compared with a little more than 65 billion Egyptian pounds (HK$150.5 billion) in spending in the previous year, the government estimated that expenditure would rise to 70.5 billion Egyptian pounds.

In income estimates, the government projected that tax and customs revenues would contribute to a reduction in the fiscal deficit.

The new budget, presented to the parliament, envisaged tax collections of 16.3 billion Egyptian pounds compared with 15 billion Egyptian pounds.

Economists, basing their figures on economic criteria set by the International Monetary Fund (IMF), estimated that Egypt's budget deficit averaged about 20 per cent in the late 1980s.

Government estimates appeared to be broadly in line with IMF deficit targets of 3.5 per cent of Gross Domestic Product (GDP).

Estimates put the budget deficit at 8.6 billion Egyptian pounds compared with 8.9 billion Egyptian pounds projected in the 1993/1994 budget.

Some of the items of government spending in the budget included food subsidies of 3.9 billion Egyptian pounds on essential commodities such as bread, the staple diet of millions.

More than 17 billion Egyptian pounds were allocated for government sector wages, representing an increase of 50 per cent from the previous year's budget of 11.6 billion Egyptian pounds.

Egypt's armed forces, among the largest and best equipped in the Middle East, were allocated 15 per cent more funding.

The budget allocated 6.2 billion Egyptian pounds for the armed forces, compared with 5.4 billion Egyptian pounds provided in the previous budget.

Inflation has averaged about seven per cent over the year, but officials are aiming for three to five per cent by the end of next year.

One of the country's main foreign currency earners, tourism, has suffered from a rash of attacks by Muslim militants on foreigners. The new budget estimates the tourism losses at 15 per cent in 1994-95.