Last Update 23:15
Wednesday, 21 August 2019

Egypt cuts economic growth forecast, ups deficit target

Egypt has largely depended on Gulf states to help limit its ballooning budget deficit after providing the country with billions of dollars since 2013

Ahram Online , Tuesday 23 Feb 2016
Finance Minister
Minister of Finance Hany Kadry Dimian (Al-Ahram)
Views: 2464
Views: 2464

Egypt lowered its economic growth forecast to a range of 4 to 4.25 percent for the current fiscal year ending on 30 June, down from 5 percent, Finance Minister Hany Kadry Dimian told reporters at an economic conference in Abu Dhabi, according to Bloomberg.

The downward revision for growth was attributed to the consequences of the downing of a Russian plane in October on tourism, a vital source of foreign currency.

Egypt's economic growth for the first quarter of the current fiscal year slowed to 3 percent, down from 5.6 percent in the same period a year earlier, a recent central bank bulletin revealed.

“Tourism is one of the major sectors, not just as a driver of growth and one of the biggest sources of current-account receipts but because it has a higher multiplier impact on other industries, Dimian was quoted as saying by Bloomberg.

Company operations in Egypt have been restrained by a foreign currency crunch as sporadic violence and attacks following the 2011 uprising have driven away tourists and investors.

Dimian added that the lower growth rates contribute to a higher budget deficit target, seen now at 11 to 11.5 percent of GDP, up from 8.9 percent.

Egypt has depended on Gulf states, who have showered the country with billions of dollars since the ouster of Muslim Brotherhood president Mohamed Morsi on the back of popular protests against his rule, to limit its ballooning budget deficit.

While they still give Egypt credit facilities for oil products, “what we are focusing on now is how to foster direct investments from the Gulf states,” Dimian was cited as saying by Bloomberg.

The Saudi Public Investment Fund pledged in December investments worth 30 billion riyals ($8 billion) for the country's housing, energy and tourism sectors.

The finance minister said the government plans to proceed with the economic reform programme, reform the state budget and tackle the foreign currency shortage.

Egypt cut fuel subsidies in July 2014, raising prices at the pump by up to 78 percent. A property tax was also introduced as part of a fiscal reform programme seeking to clench on to a growing budget deficit which hit 11.5 percent in 2014/15.

The implementation of a stalled value-added tax awaits parliamentary approval, he said.

The central bank has raised a foreign currency deposit cap for some importers, excluded manufacturing input from import restrictions and allocated EGP 5 billion ($647 million) to lenders for small and medium enterprise in an effort to boost growth.


Short link:


Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 200 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.

© 2010 Ahram Online.