* Bigger deficit seen as IMF loan talks stall
* Government projections seen as optimistic
(Adds more details, background)
By Ayman Samir
CAIRO, April 15 (Reuters) - Egypt's budget deficit will rise
to 197.5 billion Egyptian pounds ($28.7 billion) in the fiscal
year starting on July 1 from a revised 184.9 billion pounds in
2012/13, a budget document sent to parliament on Monday showed.
The government document submitted to parliament's finance
committee and seen by Reuters showed that this year's deficit
had swollen by nearly one-third from the originally budgeted 135
billion pounds, highlighting the scale of fiscal slippage.
The draft was sent to lawmakers as ministers were holding
inconclusive talks with an IMF team on a $4.8 billion loan.
Diplomats said no deal was likely during the IMF mission's visit
because the government was balking at cutting fuel subsidies and
raising sales taxes to meet the global lender's conditions.
Spending on subsidies and social benefits in 2013/14 would
rise to 205.5 billion pounds from a revised 182.8 billion pounds
this year, it showed.
Overall government spending in 2013/14 was set at 692.4
billion pounds, up from a revised 583.8 billion pounds this year
and revenue is set to rise to 497.1 billion pounds from a
revised 393.5 billion. The finance ministry was not immediately
available to explain the discrepancy in the figures.
The deficit figure for next year was in line with the
revised economic reform programme the government put forward to
the International Monetary Fund in late February. However,
economists said the growth and inflation assumptions in the
budget projection were over-optimistic.
"OPTIMISTIC PROJECTION"
The document said next year's deficit would be 9.5 percent
of gross domestic product, but that assumes nominal GDP growth
of nearly 20 percent, or about 8.3 percent in real terms after
discounting inflation, Moustafa Bassiouny of the Signet
Institute think-tank said.
The largest real growth rate Egypt has achieved in the last
decade was 7 percent, and the economy has slowed significantly
since the 2011 uprising that ousted former President Hosni
Mubarak.
The government's own growth forecast for 2013/14 is 4
percent, and economists say 3 percent is more likely. On Sunday,
the planning minister cut this year's growth forecast to 2.5
percent from 3 percent.
Bassiouny said a more realistic assumption for 2013/14 would
be nominal growth of around 13 percent - 10 percent inflation
and 3 percent real growth. That would mean the projected deficit
figure would be around 10.2 percent of GDP after a revised 10.7
percent this year.
"This still is a somewhat optimistic projection, but the
numbers provided in the report seem to be misleading," he said.
Egypt, which has suffered two years of political instability
since Mubarak's ouster, agreed with the IMF to cut its deficit
to secure the loan critical to support its economy.
Prime Minister Hisham Kandil has repeatedly said the
government will implement its economic reform plan whether or
not it reached an agreement the IMF.
($1 = 6.8711 Egyptian pounds)
(Writing by Paul Taylor and Yasmine Saleh; Editing by Jon
Boyle)
