Cairo, Egypt - The Supreme Council of the Armed Forces in Egypt, Monday approved the proposed 2011-2012 Cabinet budget. Cabinet Prime Minister Essam Sharaf had presented a modified budget proposal that included means of narrowing the budget deficit through planning for less spending and totally eliminating borrowing from outside. The latest version was accepted, following an earlier one, that was rejected by the military, because it included articles on borrowing US$ 3 billion from the International Monetary Fund. The military had made it clear to the government that it wanted it to try as much as possible to prevent the coming generation from assuming such debt.

The Cabinet plans to finance the new targeted budget deficit, which has been reduced from 11 per cent of GDP to 8.6 per cent, by borrowing US$ 20 billion domestically and relying on grants and gifts of nearly US$ 2.5 billion for the fiscal year that starts 1 July.

In the approved budget proposal, the Cabinet also increased taxes by 5 per cent on high income firms and individuals.

Earlier, Egyptian Finance Minister Samir Radwan confirmed Cairo would not borrow from foreign countries and would instead rely on grants from its oil-rich Arab neighbours, Saudi Arabia and Qatar.

The IMF has officially accepted the Egyptian desire to temporarily delay the loans, while saying the fund is committed to providing Egyptian authorities with financial and consulting support.

The IMF also confirmed its desire to continue to cooperate with the Egyptian government.

Pana 28/06/2011