Egypt’s government budget for the fiscal year 2011/12 (which starts in July) has focused on public sector salaries, as well as food and fuel subsidies, which is predictable given the social unrest and recent strikes. Even though this may help to offset some of the slowdown in the private sector, we don’t expect the additional spending to have any major economic impact in the near term. More importantly, there is no clear data on what the cost of financing will be over the coming year. This was nearly 16% of overall expenditure in 2009/10 and is likely to rise significantly in the next fiscal year.
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