Egypt budget deficit rises, adding pressure for reforms

CAIRO (Reuters) - Egypt's budget deficit in the last six months of 2012 rose to 5.1 percent of economic output, the finance ministry said on Tuesday, up sharply from the previous year as the country battles to keep costs in check to secure an IMF loan.

The deficit in the first half of the country's fiscal year reached 91.5 billion Egyptian pounds, up from 73.8 billion pounds.

Planning Minister Ashraf al-Araby said in December the year to June 2013 deficit risked rising to 200 billion Egyptian pounds unless strict fiscal policies were put in place.

Egypt, which has undergone over two years of political instability since the ouster of President Hosni Mubarak, agreed with the International Monetary Fund to cut back its deficit in order to secure a $4.8 billion loan to support its economy.

To cut the deficit, the government is considering steps to curb spending on fuel subsidies and introducing changes to the tax system that would target the wealthy.

The finance minister said last week the government would complete a revised economic reform plan and invite the IMF to visit Egypt soon.

In apparent moves under a new governor to slow the decline of the pound, Egypt's central bank on Monday tightened the local currency's trading band in the interbank foreign exchange market and reduced the frequency of dollar auctions.

Source: http://news.yahoo.com/egypt-budget-deficit-rises-adding-pressure-reforms-090650171--business.html

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