Egypt lowers projection for real GDP growth to 5.5% in FY2022/23 over Ukrainian crisis

Doaa A.Moneim , Tuesday 22 Mar 2022

Egypt lowered its expectation for real GDP growth in upcoming FY2022/2023 – which starts 1 July – to 5.5 percent, down from 5.7 percent expected in January, Minister of Planning and Economic Development Hala El-Said stated on Tuesday.

Cabinet weekly meeting
Egyptian Ministers during their weekly meeting on Tuesday 22 March, 2022. Photo courtesy of Egyptian cabinet Facebook page.

El-Said made her statements while reviewing the key targets of the FY2022/23 plan before the cabinet’s weekly meeting.

The announced projection is equivalent to the one announced in August 2021, which was raised in January prior to the Russian-Ukrainian conflict.

El-Said noted that such a conflict has caused a significant shock in the global markets, which has reflected negatively on trade, investment and inflation rates.

On inflation projections, El-Said said that the government plans to contain the inflationary wave.

El-Said said that FY2022/23 would see an increase in public investment allocations by 15.2 percent, down from 16.2 percent estimated prior to the conflict, to represent 78 percent of the total investments during the fiscal year.

During the meeting, Prime Minister Mostafa Madbouly said that the finance ministry will restructure the FY2022/23 plan in light of the global and domestic economic developments.

Minister of Finance Mohamed Maait said that the government may resort to revising the targets of the upcoming FY2022/23 as a result of the crisis’s spillover on the global and local economy.

Prior to the crisis, Egypt planned to raise the initial budget surplus to two percent, up from the 1.5 percent in the current FY2021/22, and to lower the overall budget deficit to 6.1 percent in FY2022/23 with the objective of reducing it to 5.1 percent in FY2024/25.

Maait said that Egypt is expected to record a budget deficit of 6.7 percent in the current FY2021/22, adding that the government could revisit this target in light of the ongoing challenges.

Moreover, the government intends to lower the gross debt to GDP ratio to below 90 percent in FY2022/23, and down to 82.5 percent by the end of FY2024/25, as well as lowering the debt service to less than 30 percent of the total budget expenditure in FY2022/23.

On Monday, the finance minister announced an EGP 130 billion incentives package under the directives of Egypt’s President Abdel-Fattah El-Sisi to mitigate the fallout of the Ukrainian crisis and to absorb the impacts of the global inflationary wave.

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