Egypt needs to tap external sources for as much as E£60bn ($9.8bn) to finance its 2012-13 projected budget deficit of E£135bn ($22.2bn), Egyptian Minister of Finance Mumtaz Sa’id has said. Reviewing the budget situation in the current year, the minister noted that of this total only E£75bn ($12.3bn) could be raised domestically through various debt instruments and the remainder will have to come from foreign borrowing. This is in line with the budget law which authorizes the ministry of finance to issue treasury bills and/or bonds, as well as sukuk. Last week, the ministry issued treasury bills worth E£4bn ($657mn) with a 14.465% coupon to raise funds domestically.

The minister noted that the preliminary closed accounts show that the 2011-12 budget had realized a deficit of E£170bn ($27.9bn), which represents 11% of GDP, instead of the originally projected deficit of E£134bn ($22.0bn), or 8.6% of GDP. This 27% increase in the deficit arose from a rise in the public sector wage bill to E£122bn ($20.0bn) from the projected E£110bn ($18.1bn), as a result of additional wage increases for some groups after the 25 January 2011 revolution. Also contributing was a fall in the government’s revenue from various sources (especially tax revenues) as a result of the decline in economic activity and the outflow of investments following the political turmoil. The minister noted that the oil revenue surplus had fallen as a result of the need to use the cash flows from this surplus to finance imports of petroleum products. Egypt hopes to finalize shortly a deal with the IMF for a $4.8bn standby facility which has been under discussion for over a year. (CONTINUED - 364 WORDS)