Egypt has managed to bridge the $12 billion financial gap in 2020 thanks to the several finances acquired from global and regional financial institutions, according to France-based BNP Paribas Bank.
The Ministry of Planning and Economic Development said in a statement on Thursday that the bank stated that the loans Egypt has secured recently have contributed to obtaining finances to address the repercussions of the COVID-19 crisis.
These procurements include the International Monetary Fund (IMF) loan under the rapid finance instrument, offering international bonds worth $5 billion, and the ongoing negotiations to acquire finances valued at $9 billion from the IMF and other financial institutions, the ministry added. .
In April, BNP Paribas said in a report that the Egyptian economy has the potential to contain the negative impacts of the pandemic and to attain positive economic growth rates during the current FY 2019/2020.
The bank attributed its expectation to the availability of cash in the domestic market and to Egypt’s strong fiscal balance, pointing out that Egypt's foreign currency reserves have reached notable levels over the past few months, which backed the Egyptian pound's performance against other currencies.
The report highlighted Egypt’s measures amid the coronavirus crisis that aimed at alleviating the public's burdens and curbing the losses companies are likely to bear owing to the pandemic.
The French bank projected Egypt’s economy to grow by 2.6 percent in 2020 and 3.4 percent in 2021, forecasting the annual inflation rate to record lows of 5.9 percent in 2020 and 7.5 percent in 2021.
On Tuesday, the Minister of Planning and Economic Development Hala El-Said said Egypt’s economic growth is projected to reach four percent in 2020 with a GDP loss estimated at EGP 105 billion in FY 2019/2020, which is the lowest among countries globally.
El-Said's comments were made during her participation in the plenary parliamentary session to discuss parliament’s budget and planning committee’s report regarding the FY 2020/2021 budget plan.
El-Said added that inflation reached five percent in May, the unemployment rate recorded 7.5 percent, and trade balance deficit declined to 36 percent.
On Egypt’s economic growth amid the COVID-19 crisis, El-Said explained that the country is reaping the benefits of the national mega projects, with the total cost of EGP 6 trillion, which contributed to improving Egypt’s ranking in several global indices.
She added that investments in the information and communication technology sector have been raised in FY 2020/2021 budget plan by 300 percent, given that the COVID-19 crisis has proved the importance of this sector that witnessed investments worth EGP 40 billion over the past several years.
She added that construction sector investments have increased by 77 percent, as the sector comprises a huge workforce.
She noted that 70 percent of slum areas across the country have improved.
More than EGP 5 billion were appropriated for industrial complexes, while investments in the health sector have been raised by more than EGP 21 billion, with an increase exceeding 72 percent on the allocations allocated of previous years, according to El-Said.
She added that EGP 8 billion were allocated for the neediest villages in the FY 2020/2021 budget, saying that the budget takes into account the fair distribution of investments through directing 60 percent of public investments towards lower-income and border cities.
“The COVID-19 crisis has affected several sectors in Egypt, such as tourism and aviation. Nonetheless, the Egyptian economic growth rate is still the best globally thanks to the diversity that the Egyptian economy has and the success of the country’s economic reform program,” said El-Said.
In May, Egypt hired BNP Paribas, Citi, HSBC, JPMorgan and Standard Chartered to arrange the $5 billion Eurobonds sale which took place in the same month in four 12- and 30-year yields.
In April, Egypt’s Finance Ministry said in its draft budget that it needs EGP 988 billion to close the fiscal gap, up 20 percent year-on-year from the EGP 820 billion that was projected for the current FY 2019/2020.