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Jul 2, 3:11 PM EDT

Egypt passes new budget for fiscal year 2015-2016

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CAIRO (AP) -- Egypt's president has approved a new budget for fiscal year 2015-2016, slashing the projected budget deficit to 8.9 percent of gross domestic product, the country's finance ministry said Thursday, in a move likely to please international creditors.

The revised budget deficit for the previous year is 10.8 percent. The finance ministry said 50 percent of public spending will be on social protection programs.

The ministry also said that revenues are expected to increase by 27.7 percent to 622 billion Egyptian pounds, with expenditure set to increase 17.4 percent to 868 billion pounds.

It said the new budget aims to reduce public debt, restore confidence in the economy and re-prioritize spending to improve basic public services and strengthen social protection. The fiscal year begins July 1, and the ministry said it is targeting 5 percent economic growth for the year.

President Abdel-Fattah el-Sissi's office announced the budget as Egyptian troops were battling Islamic State-linked militants in the restive Sinai Peninsula where a wave of attacks the day before killed scores of soldiers.

Also Thursday, Egypt's currency fell to a new low point against the dollar, the first such drop since February and a development that could help boost much needed foreign investment.

The central bank set a cutoff rate of 7.63 Egyptian pounds per dollar in an auction that sold $38.8 million, compared to the previous rate of 7.53.

Investors and economists see the currency as overvalued although the central bank has taken steps to alleviate the discrepancy, allowing the pound to slide somewhat before an investor summit last March.

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