May 5, 2020 / 11:21 AM / a month ago

UPDATE 1-Egypt 2020/21 budget deficit could widen to 7.8% of GDP due to coronavirus

(Adds details on debt, background)

CAIRO, May 5 (Reuters) - Egypt’s budget deficit for the financial year that will begin in July will widen to 7.8% of gross domestic product from a previously projected 6.2% if the coronavirus crisis continues until the end of December, the finance minister said on Tuesday.

The government had projected a primary surplus of 2.0% before the crisis hit, but this would fall to only 0.6% should the crisis continue, Mohamed Maait said at a planning committee meeting at parliament.

Tourism, which accounts for 5% of GDP, came to a virtual halt in March after the government closed down most commercial flights. Remittances from Egyptians working abroad, which accounts for 10% of GDP, have also come under threat. The country has been put under a nighttime curfew.

Before the crisis Egypt had expected a deficit of 7.2% for the current financial year ending in June, but now projects this to widen to 7.8% or 7.9%, Maait said. This would still be narrower than the 8.2% deficit recorded in 2018/19.

Total state debt could rise to 88% of GDP from a previously projected 83% should the crisis continue, he added.

Egypt announced a series of new taxes on Monday, including levies on petrol and diesel that it said would be paid by the state oil company rather than by increasing the price at the pump. (Reporting by Nashaat Hamdy; Writing by Patrick Werr; Editing by Alex Richardson, William Maclean)

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