CAIRO, April 16 (Reuters) - Egypt's finance minister said on Tuesday that the government's main priority was to reduce inflation to within Egypt's central bank target and that economic growth was expected to rise in the financial year starting in July to 4.2%, from 2.8% this year.

Inflation dipped to 33.3% in March from a record 38.0% in September, far higher than the central bank's long-standing target of between 5% and 9%.

The government also hopes for lower interest rates, and to reduce the state's role in the economy and allow the private sector to take up the slack, the minister, Mohamed Maait, said during the IMF Governor Talks series in Washington.

It has put a limit of 1 trillion Egyptian pounds ($20.6 billion) on all public investment, including that of the military, he said.

The private sector should make up at least 65-70% of the economy, he added.

Egypt's economy was hurt over the last half year by the crisis in Gaza, which slowed tourism growth and cut into Suez Canal revenue, two of the country's biggest sources of foreign currency.

Revenue from the waterway has fallen by more than 60%, Maait said. ($1 = 48.4500 Egyptian pounds) (Reporting by Aidan Lewis; Writing by Adam Makary and Patrick Werr; Editing by Chris Reese and Marguerita Choy)