Credit Macro & Industry Expertise Foundation Fitch Solutions expects Egypt’s fiscal deficit to narrow from an estimated 9.4 percent of GDP in FY2017/18 to 7.8 percent in FY2018/19 and 6.4 percent of GDP in FY2019/20, a recent report said.

“Tax reforms and robust real GDP growth will result in higher tax revenues, while government earnings from the gas sector will expand in line with rising production,” the report said.

“While elevated debt servicing costs mean that Egypt will continue to run overall fiscal deficits in the coming years, we expect these to shrink from 9.4 percent of GDP in FY2017/18 to 7.8,” according to the foundation.

“Further energy subsidy cuts will also help to contain expenditure growth,” it added.

In 2016, Egypt embarked on an economic reform programme backed with an extended fund facility from the IMF. Under the programme, a number of measures have been put in place, including imposing a value-added tax (VAT) and cutting energy and fuel subsidies with the aim of lowering the budget deficit.

The ambitious reform programme is implemented with the help of a five-year IMF credit facility worth $12 billion.

A recent IMF report expects the Egyptian economic growth rate to increase from 5.3 percent in 2018 to 5.5 percent next year.

The average growth rate is likely to reach 6 percent until 2023 and unemployment could decline to 9.9 percent in 2019 down from 10.9 this year, according to the IMF report.