Egypt's Minister of Finance Mohamed Maait announced that FY2019/2020 is expected to end with a budget deficit ranging between 7.8 percent and 7.9 percent because of the impact of the COVID-19 pandemic.
Maait’s comments were made during a meeting of parliament’s planning and budget committee held on Tuesday.
Reviewing the expected impacts of the COVID-19 outbreak on the FY2020/2021 draft budget, Maait revealed that the projected budget’s surplus was lowered to 0.6 percent, down from the 2 percent that was expected in the FY2020/2021 draft budget statement released in April.
He added that the FY2020/2021 draft budget expects the total budget deficit to rise to 7.8 percent in case the COVID-19 pandemic crisis lasts until the end of December, up from the targeted total deficit by 6.2 percent in the previous budget’s statement.
Maait also noted that the government has put a plan that targets reducing the total budget deficit to lower than 5 percent by 2021/2022, reaching 4.6 percent in FY2021/2022 budget.
Total state debt is expected to rise to 88% of GDP from a previously projected 83% if the crisis continues, the minister added.
On Sunday, Minister of Planning and Economic Development Hala El-Saeed revealed that Egypt’s economic growth is expected to fall to 4.5 percent and 4.2 percent respectively in FY2019/2020, down from the 5.8 percent that was expected previously, driven by the expected slowdown in the third and fourth quarter of the fiscal year’s performance.
She also said that in case the COVID-19 crisis lasts to the end of December, Egypt’s targeted economic growth is expected to drop to 2 percent, down from the 3.5 percent that is expected if the COVID-19 situation is over by the end of FY/2019/2020, which ends in June.
Minister El-Saeed added that private investments are also expected to decline by 30 percent if the COVID-19 crisis lasts to the mid-FY2020/2021, which will affect Egypt’s total investments, which stand at EGP 740 billion in the FY2020/2021 draft budget.