Egypt's Budget Still in Limbo as Fiscal Year Begins

The 2012/13 financial year began in Egypt with the country still lacking a new state budget. Annual state spending plans typically take effect on 1 July, but the status of this year's budget, currently in the hands of the Supreme Council of the Armed Forces (SCAF), remains unclear.

A draft of the document was presented by Egypr's interim Cabinet to Parliament for debate on 4 June, over a month late. But the dissolution of the assembly following a mid-June legal ruling, and SCAF's resultant assumption of certain legislative powers, has meant Egypt's elected representatives have had no opportunity to make changes to the budget proposal.

The 2012/13 draft contains sweeping new plans to ramp up spending on infrastructure while slashing energy subsidies, the latter a potentially socially explosive move. The Freedom and Justice Party, which held the largest portion of seats in Parliament, has claimed the SCAF drive to push through the budget without changes formed part of a "conspiracy against the next president", its candidate, Mohamed Morsi.

A source at the Ministry of Finance told Ahram Online that the interim government is still working with the 2011/12 budget until the new one is approved. "This is a standard procedure," said the source, who spoke on condition of anonymity. "But we are expecting SCAF to approve the budget in a few days." It is, however, uncertain whether SCAF will make significant changes to the draft. The state-run Al-Ahram newspaper reported on Sunday that the budget will be no different from the plans for 2012/13 tabled in early June by Kamal El-Ganzouri's government.

That document suggested ramping up 2012/13 state spending to LE533.7 billion ($88.3bn), a rise of 8.8 per cent on the LE490.6 billion spent by the state the previous fiscal year. State revenues are projected to climb to LE393.4 billion, up from the LE349.6 billion generated the previous year. The deficit will reach LE140.3 billion, around 7.9 per cent of GDP, compared to a ratio of 8.6 per cent in 2011/12.