This presentation was made by Fatma EL ASHMAWY, ministry of Finance, Egypt, at the 9th OECD MENA-SBO meeting held in Kuwait City on 12-13 October 2016

1. (October 12th 2016)
Ministry of
Finance
Key Economic Developments

2. 2
Current Economic Status
Real GDP growth picked up recently after 4
years of sluggish growth, yet it continues to be
below potential.
6.2
2.1
4.2 4.3
0
1
2
3
4
5
6
7
8
Average
2005-2010
Average
2011-2014
2014/2015
July-March
2015/2016
Real GDP Growth (%)
Unemployment rate reversed trend and started
to slightly edge down to 12.5% by June 2016
after reaching a high of 13.3% in June 2014.
9.3
12.7 12.7 12.5
0
2
4
6
8
10
12
14
Average
2005-2010
Average
2011-2014
June 2015 June 2016
Unemployment Rate (%)

3. 3
Current Economic Status
Consumption continues to be main driver of growth, albeit with a smaller contribution to
growth recording smaller rate. Investment spending started to rebound recently and to post
higher positive contribution rates. Net exports continue to be a drag on growth.
2.4
4.4
3.2
-2.0
1.6
-0.4
1.1
-1.4
0.2
1.2 0.8
5.0
5.0
4.4
4.6
3.5
4.4
5.1
2.7
4.0
3.2
5.0
-0.5
-2.4
-0.5
2.1
0.1
-2.2
-4.0
0.8
-2.1
-0.2
-1.6
-6
-4
-2
0
2
4
6
8
10
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
July-March
2015/2016
Contribution to GDP growth – (Percentage Points)
Investments Final Consumption Net Exports

4. 4
Current Economic Status
Serious fiscal challenges as reflected in the high deficit and debt ratios to GDP that reached critical
levels
2.1
3.6 3.8
5.0
3.9
3.6
8.1
9.8 10.1
13.0
12.2
11.5
0
2
4
6
8
10
12
14
09/10
10/11
11/12
12/13
13/14
14/15
Overall Deficit and Primary Deficit
(% of GDP)
79.2
82.1
79.0
89.0
90.6
93.7
65
70
75
80
85
90
95
100
09/10
10/11
11/12
12/13
13/14
14/15
Total Government Sector Debt
(% of GDP)

5. 5
Current Economic Status
High and sustained inflation differential between Egypt and its trading partners over a long
period of time weakened competitiveness of the Egyptian economy
5.8 5.7
5.5 5.5
5.6
5.8
6.0
6.5
7.1
7.3
8.2
8.8
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
13/8/2016
Exchange Rate (LE/Dollar)
Egyptian Pound has depreciated against US$ by
around 56% during 2011-October 2016
10.9
11.7
16.2
11.5
11.0
8.7
6.9
10.1
11.0
10.2
14.0
1.8
3.4
1.5
0.6
2.4 2.6
1.3 1.7
1.2 0.9 0.76
0
2
4
6
8
10
12
14
16
18
06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Jul-16
EU-27, US, Canada, Japan and China
Inflation Differential between Egypt and
its trade partners*
Inflation Rate in Egypt Trade Partners' Average Inflation Rate

6. 6
Current Economic Status
Egypt deteriorating trade deficit reflects
declining exports and deteriorating oil balance
… and lower-than-potential capital inflows are
also contributing to deteriorating capital
account
6.1
11.1
13.2
8.1
6.8
2.2
4.0 3.8 4.1
6.4 6.8
2.8
-0.9 -1.4
-9.2
7.9
-2.6
-5.0
1.5 1.2
-0.6
-1.3
-15
-10
-5
0
5
10
15
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/2016
US$Billion
Foreign Direct Investments Portfolio Investments
4.9 6.0 4.9 4.0 5.1 2.9
-0.5
0.9
-0.8
-3.5 -3.6
-16.8
-22.3
-28.3 -29.1 -30.2 -30.0
-33.6 -31.6 -33.3 -35.6 -34.0-40.0
-35.0
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
$USbillion
Trade Balance (oil vs. non-oil)
Trade Balance (oil) Trade Balance (non-oil)
75
142 137
192
143
130
151
136
154 144
100
62
121
114
162
198
184 173
185
168 165 158 150 143
0
50
100
150
200
250
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
Non-oil and oil exports per capita ($US/person)
Oil exports per capita ($US/person) Non-oil exports per capita ($US/person)

7. 7
Current Economic Status
Remittances declined in 15/16 due to capital
restrictions and presence of parallel market
Tourism was hardly hit by recent incidents
7.2
8.2
10.8
10.5
11.6
10.6
9.4
9.8
5.1
7.4
3.8
2.0 4.0 6.0 8.0 10.0 12.0 14.0
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/2016
Tourism Revenues (US$ Billion)
0.6 0.8 1.0 0.6 1.0 0.8 0.6 0.8
11.9
2.7
0.1
5.0
6.3
8.4
7.6
9.5
12.4
17.8 18.4 18.4
19.2
16.8
0.0
5.0
10.0
15.0
20.0
25.0
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/2016
Private Transfers and Official Transfers (US$
Billion)
Official Transfers Private Transfers

8. 8
Current Economic Status
Thus, Egypt external position is deteriorating This is leading to intensified pressures on
NIR…
22.9
28.6
34.6
31.3
35.2
26.6
15.5 14.9
16.7
20.1
17.5
6.1
5.4
6.9
6.6
6.9
4.7
2.8 2.6
2.8
3.6 3.7
0
1
2
3
4
5
6
7
8
0
10
20
30
40
50
60
June2006
June2007
June2008
June2009
June2010
June2011
June2012
June2013
June2014
June2015
June2016
MonthsofImports
US$Billion
Net International Reserves
Net International Reserves NIR - to - Imports Coverage
2.9
3.9
2.6
4.9
4.5
5.5
2.6
3.7
2.3
0.9
3.7
5.5
-
1.0
2.0
3.0
4.0
5.0
6.0
2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016
Current Account Deficit
%of GDP
Current Account Balance (Excluding Transfers) (% to GDP)
Current Account Balance

9. 9
State Budget
• It is the plan for an upcoming fiscal year (starts in July 1st and ends in June 30th) to
achieve specific goals within the framework of the plan for economic and social
development and in accordance with the state policies.
• Of the most important financial and economic policy management tools through
which:
 The government can prioritize expenditures as well as provide funds to cope up with
emergencies
 Achieve social and economic objectives taking into account the social dimension as a
strategic objective.
• It presents the government’s forecasts for the collection of revenues (taxes, grants
and other revenues), as well as expenditures appropriations in accordance with the
economic classification (wages and compensation of employees, purchase of goods and
services, interest payments, subsidies, grants and social benefits, other expenditures,
and investments) during a full fiscal year.

10. 10
State Budget
• State budget is the most important annual document prepared by the government
and submitted to Parliament for discussion and approval.
• It also includes expenditures in accordance with the functional classification (health,
education, social protection, defense and national security…etc.)
• The preparation and presentation of the state budget abides by GFS 2001
classification prepared by the International Monetary Fund (IMF), but on cash basis
and not on accrual basis.
• The budget also includes public debt service obligations including loan repayments
and government bonds maturing during the fiscal year, in addition to expected
financing needs plan and sources of finance.
• State Budget includes all the resources and uses of the budget sector including the
central administration, local governments and public service authorities.

11. 11
Legislative framework for the state budget
• Law No. (53) of 1973, as amended, is the primary focus of the fiscal performance. It
is the comprehensive law governing the general state budget based on the following
principals:
 The state budget is the plan for an upcoming fiscal year to achieve specific goals within
the framework of the plan for economic and social development and in accordance with
the state policies.
 The fiscal year starts in July 1st and ends in June 30th
 The state budget is based on the principle of generality and inclusiveness, which
includes (by law) all uses and resources of the central administration, local governments
and public service authorities. However, it does not include economic authorities
budgets.
 The budget includes contingencies without being bound by economic classification, in
order to meet national inevitable obligations, emergencies, expenses or commitments
that were not taken into account while preparing the budget.

12. 12
Legislative framework for the state budget
Budget
Circular
End of
September
Entities
prepare
their
budgets
Entities’
proposals
MoF’s
Budget
Sector
Feedback
MoP
proposal -
Investme
nts
Presented
to Minister
of Finance
Presented to
Ministers’
council Early
March
Presented to
President
then to
parliament
End of March
Parliament
Discussions
Budget law
End of June
Execution
July 1st

13. 13
Structure of State Budget
State Budget
Central
Administration
Local
Governments
Public Service
Authorities
Private
financing
funds
Public institutions
budgets that are
not included in the
state budget
Economic
Authorities
Public Sector
Enterprises
Law 203, 1991
Budgets of Banks
abiding by law No.
117, 1976 and law
No. 88, 2003
Budgets of
enterprises abiding
by law No. 159, 1981

14. 14
Relationship between budget and other public
institutions
State
Budget
other public
institutions
Budgets (Not
included in
state budget)
Subsidies, capital
contributions and
loans
Surplus

15. 15
State Budget Classification: Administrative
Classification
• Central Administration: includes all ministries, presidency, Council of Ministers and
the Administrative Control Authority's (152 Budget Entity)
• Local governments: it includes governorates and affiliate services directorates (323
Budget Entity)
• Public service authorities: include universities and independent service authorities
(150 Budget Entity)

16. 16
State Budget Classification: Economic Classification
Economic
Classification
Item
Economic
Classification
Item
1 Resources 2 Uses
11 Revenues 21 Expenditures
111 Chapter 1: Taxes 211 Chapter 1: Wages and Compensation of employees
112 Chapter 2: Grants 212 Chapter 2: Purchase of goods and services
113 Chapter 3: Other Revenues 213 Chapter 3: Interest Payments
214 Chapter 4: Subsidies, Grants and Social Benefits
215 Chapter 5: Other Expenditures
216 Chapter 6: Purchase of Non-Financial Assets (Investments)
12 Receipts from Acquisition 22 Acquisition of Financial Assets
124
Chapter 4: Receipts from lending,
sales of financial and other assets
227 Chapter 7: Acquisition of domestic and foreign financial assets
13 Sources of Finance: Borrowing 23 Loans Repayment
135 Chapter 5: Borrowing 238 Chapter 8: Domestic and Foreign Loans Repayment

17. 17
State Budget Classification: Functional Classification
Code Functional Sector
1 701 General Public Services
2 702 Defense and National Security
3 703 Public Order and Public Security
4 704 Economic Affairs
5 705 Environment Protection
6 706 Housing and Public Utilities
7 707 Health
8 708 Youth, Culture and Religious Affairs
9 709 Education
10 710 Social Security

18. 18
FY16/17 Budget – Key Remarks
6.9
8.1
9.8
10.1
13.0
12.2
11.5
8.9
9.8
5
6
7
8
9
10
11
12
13
14
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
Budget
2016/2017
Budget
%toGDP
Overall Fiscal Deficit

19. 19
FY16/17 Budget – Key Remarks

20. 20
FY16/17 Budget – Key Remarks

21. 21
FY16/17 Budget – Key Remarks
General Public Services,
26, 17%
Defense and National
Security, 0, 0.03%
Public Order and Public
Security, 4, 3%
Economic Affairs, 17,
12%
Environment
Protection, 1, 0%
Housing and Public
Utilities, 76, 52%
Health, 8,
5%
Youth, Culture and
Religious Affairs, 4, 3%
Education,
11, 8%
Social Security, 0, 0.1%
Functional Classification of Investments - FY16/17

22. 22
Public Financial Management (PFM) Reforms
Create a Macro-Fiscal Policy Unit
Establish a PFM unit that has multiple mandates; internal auditing, government accounting, contingent
liabilities and fiscal risks
Establish a unit for Public Debt Management and Public Debt Automation (DMFAS)
Automation of stages of state budget preparation
Application of Electronic Payment and Collection
Establishment of Treasury Single Account (TSA)
Activate the electronic collection of the Egyptian Customs Service and the system of current accounts
Activate the electronic collection of the Egyptian Tax Service
The partial application of government financial management information system GFMIS
The partial application of automation of the wage system (Payroll)