The parliament’s Planning and Budget Committee is set to summon Minister of Finance Amr El-Garhy next week to discuss the repercussions of the hiking interest on public debt and customs proceeds expected by the end of the current fiscal year, as the target budget deficit climbs to 10.25%, as well as the delayed presentation of the International Monetary Fund (IMF) loan agreement to the parliament.
Parliamentary sources said that the committee has indicators that the target budget deficit increased to 12.5% by the end of the current fiscal year, as the government raised its expectations from 9.8% to 10.25%.
The sources added that members of the committee met last week with officials of the Ministry of Finance and agreed to summon El-Garhy to discuss the performance of the budget indicators.
They added that the parliament is worried about the performance of the budget as the exchange rate exceeded the expected EGP 9 to the dollar.
They pointed out that initial indications for the exchange rate in the current fiscal year ranged between EGP 15-16.5, which would stress the second item of the budget related to bought services and commodities as well as the sixth item related to investment.
Furthermore, they added that members of parliament (MPs) are worried about hiking inflation that may force the Central Bank of Egypt (CBE) to raise interest rates, which would push debt services estimated at EGP 294bn.
Mohamed Moiet, deputy minister of finance for treasury, has stated that the cost of servicing the debt would rise to EGP 310bn on the back of the last interest rate increase.
The return on overnight deposit and lending at the CBE is at 14.75% and 15.75% respectively, while main operation settles at 15.75%, compared to credit and debit at 15.25%.
MP Talaat Khalil said that allocations for goods and services in the current fiscal year declined to EGP 40bn—down from EGP 41bn in the past fiscal year—while investment allocations rose from EGP 74bn to EGP 107bn.