Egyptian government spending fell by 6.8% in the last six months of 2009 compared to the same period in 2008, the country’s Ministry of Finance has said in a new report. Figures on the ministry website showed total spending to have fallen to E£152.44bn ($27.85bn), mostly as a result of a major drop of 45.75% in spending on subsidies, grants and social benefits to E£39.44bn ($7.21bn). Government expenditure in all other areas increased over the same period, including the purchase of raw materials, which increased 31.97% from E£1.25bn ($230mn) over the last six months of 2008 to E£1.65bn ($300mn) in 2009, and purchase of operating fuels, oil and moving parts, which increased dramatically from E£320mn ($58.46mn) to E£863mn ($157.66mn). Spending on salaries and wages, meanwhile, increased by 13.55% to E£32.06bn ($5.86bn). When the 2009-10 budget was adopted in July 2009, the government said that it would direct public spending to specific targets in order to boost economic growth, such as to social services and employment as well as a comprehensive economic and social plan. In total, the budget allocated an aggregate E£170.2bn ($31.09bn) to social projects, such as education, health, subsidies, pensions and social insurance (MEES, 20 July 2009).

The budget deficit in the second half of 2009 rose to E£57.48bn ($10.5bn), or 4.9% of GDP, from E£36.06bn ($6.59bn) in the same six-month period in 2008. The country’s 2009-10 budget anticipates an E£99.7bn ($18.21bn) deficit for the entire fiscal year, which began on 1 July. “The rise in the budget deficit reflects a slowdown in local economic activity and the effect of the global financial crisis on the state general budget,” the ministry said.  Public revenues shrank 25.8% over the six-month period, from E£127.68bn ($23.33bn) to E£94.69bn ($17.3bn), with non-taxed revenue like grants falling dramatically from E£5.67bn ($1.04bn) to E£1.95bn ($356mn). Egypt’s cabinet is expected to present an E£11.2bn ($2.05bn) economic stimulus package in the coming weeks. It would be the third adopted since the start of the global financial crisis in 2008.