UPDATE 1-Egypt govt deficit soars in 7 months to end-Jan -MENA

Wed Feb 27, 2013 8:25am EST

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CAIRO Feb 27 (Reuters) - Egypt's government deficit rose by more than a third in the seven months to the end of January from the same period a year earlier, state media reported on Wednesday.

Two years of political turmoil has battered state finances by driving away foreign investors and tourists, and a sharp fall in the Egyptian pound has pushed up the cost of subsidies for imported energy and food.

The deficit hit 119.8 billion Egyptian pounds ($17.8 billion) in the first seven months of the fiscal year, which begins in July, compared with 88.2 billion a year earlier, the state news agency MENA said.

Citing a finance ministry report, it said the figure equalled 6.7 percent of annual gross domestic product (GDP).

In a revised economic reform plan, the government said it is targeting a deficit for the whole financial year to June of 189.7 billion pounds, or about 10.9 percent of total economic output. However, this factored in economic reforms and it forecast the deficit would hit 12.3 percent of GDP without action.

Cairo has said it will reopen negotiations early next month on a $4.8 billion loan from the International Monetary Fund to bolster its finances. Foreign currency reserves have also fallen to critical levels.

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