The Finance Ministry has revised its presentation of the state budget, with the result that the overall deficit is lower than previously announced. Economists say the new system is in conformity with models recommended by the IMF, and it allows the government to realise the benefits of the large surpluses generated by the social insurance funds (SIFs).
The ministry has issued three columns of figures for the budget. The first corresponds with the previous system, with all government revenues and expenditure entered. The second column adds in earnings and expenses from the National Investment Bank (NIB) and the General Authority for Supply Commodities (GASC), and the third adds in the operations of the SIFs.
The SIFs - financed by contributions levied on behalf of civil servants and public and private sector employees - account for almost 70 per cent of the resources of the NIB. Just over 50 per cent of the NIB's funds are lent to the government, roughly 25 per cent is in the form of loans to public sector companies and the remainder is defined as being devoted to other purposes. The SIFs generate surpluses because the interest earned comfortably exceeds the amount paid out in pensions, as a result of the young profile of the Egyptian population. The NIB and the GASC together constitute a net drain on resources.
The net result is that the second column shows the highest budget deficit, while the third column, including all the elements, shows the lowest deficit. However, this figure has been rising, and reached 2.3 per cent of gross domestic product (GDP) in the first quarter of the current financial year, which started on 1 July 2001.
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