Egypt sees 2011-12 budget deficit at 9.38pct of GDP

Egypt's state budget deficit, bloated after political turmoil rocked the economy, is forecast to widen to 9.38 per cent of gross domestic product (GDP) in the 2011/12 fiscal year, the country's finance minister said.

That compares with an expected deficit of about 8.5 per cent for the 2010/11 fiscal year ending on June 30, Samir Radwan told Reuters on Monday.

Soaring prices and high unemployment fuelled pro-democracy protests that brought down President Hosni Mubarak in February after 30 years in power in the Arab World's most populous state.

Economists say a decline in tourism, consumption and business activity since the unrest broke out has hit tax revenues, which make up about 60 per cent of government income. The government has also boosted social spending in response to protestors' demands for jobs and higher wages.

The draft budget due to be presented to the cabinet foresees revenue of 342.6 billion Egyptian pounds ($57.6 billion) and spending of 500.7bn pounds, Radwan said.

Before the unrest, Egypt had predicted a deficit of 7.9 per cent of GDP for fiscal 2010/11, but later revised that upwards to 8.2 to 8.4 per cent. Planning and International Cooperation Minister Faiza Abu el-Naga announced on Monday a development plan worth 230bn pounds to kick-start the economy after Mubarak's ouster.

She said that 55 per cent of the plan, which still needs to be approved by the government, would come from the private sector. The rest would come from the public sector.

"The hope is that the private sector - local, Arab and international investors - will contribute to this plan after security returns to the country," she said.

The plan envisages adding 1.7bn pounds for extra spending on health, education, training and vocational education, the minister said.

Egypt has said it is seeking $10 billion in funding from international lenders and rich nations to help it cope with the fallout from the mass protests that toppled Mubarak.

The country's economy contracted an estimated 7 per cent in January-March and the International Monetary Fund is projecting a plunge in growth to 1.0 per cent this year, well below its long-term average, after a 5.1 per cent expansion in 2010.