November 2, 2017 / 10:24 AM / a year ago

UPDATE 1-Egypt's 2016-17 government spending $5.65 bln over-budget after currency float -sources

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CAIRO, Nov 2 (Reuters) - Egypt spent over 100 billion Egyptian pounds ($5.65 billion) more than it planned to in the 2016-17 fiscal year due to its decision to float the pound currency, three government sources told Reuters on Thursday.

The central bank floated the pound in November last year and the government reached an agreement with the International Monetary Fund for a $12 billion loan that included subsidy cuts, tax increases and looser capital controls.

The government had earmarked 974 billion pounds for spending in the 2016-17 budget approved by parliament but spent over 100 billion more. Egypt’s fiscal year runs from July 1 to June 30.

“The government asked for parliament’s approval for an extra allowance worth over 100 billion pounds due to extra spending because of the increases in prices of fuel subsidies and wheat purchasing as well as higher interest payments in the budget. Expenses were higher than planned for because of the float,” said one senior government source, who requested anonymity.

Oil Minister Tarek El Molla said in August that Egypt’s fuel subsidy bill in 2016-17 jumped to 120 billion pounds, up from 51 billion in 2015-16.

$1 = 17.6990 Egyptian pounds Reporting by Ehab Farouk; Writing by Ahmed Aboulenein; Editing by Gareth Jones

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