Egypt’s government targets decreasing public debt to GDP ratio to 87 percent in FY 2020/2021, 84 percent in FY 2022/2023, and 79 percent in FY 2023/2024, said Minister of Finance Mohamed Maait on Monday.

Maait was speaking at the House of Representatives to review his ministry's efforts to implement the government's programme over the medium term (2018-2020). 

The finance ministry’s medium-term debt management strategy focuses on reducing debt services, prolonging its period, and improving governmental security in markets to expand the investors' base that will, in turn, provide the required liquidity to support the budget, Maait said.

According to this strategy, the external debt trajectory will be set in accordance with the expected cash inflows to the country to a maximum of 37 percent of GDP, which will be put on a downturn path per year, according to Maait.

It also targets decreasing external debt to GDP ratio to below 30 percent over the medium term, said the finance minister.

Additionally, the strategy aims at decreasing public debt to GDP ratio to about 70 percent over the coming four years and putting a cap on loans obtained through external bodies over the same period, said Maait.

Moreover, the strategy includes settling a portion of debts through exchanging them with unique state-owned assets. The aim is to reduce public debt by EGP 100 billion annually for the coming four years, Maait clarified.

Over the medium term, Egypt’s budget initial surplus is expected to reach 0.6 percent of GDP in FY 2020/2021, the budget deficit to GDP ratio 7.8 percent, and the public debt to GDP ratio 88 percent.

The finance ministry aims to decrease the budget deficit gradually to reach 6.5 percent in FY 2020/2021, 5.3 percent in FY 2022/2023, and 4.6 percent in FY 2023/2024.

Maait said that the ministry targets to restore the budget's initial surplus to pre-pandemic levels, at two percent of GDP, over the medium term, according to Maait.

He added that revenues from real-estate taxes hiked by 500 percent in FY 2018/2019, compared to FY2014/2015, yet this improvement was affected negatively in FY 2019/2020 mainly due to the COVID-19 crisis.

Meanwhile, Egypt’s customs revenues jumped by 100 percent over the last six years, Maait said.

He unveiled that Egypt’s income tax revenues increased to exceed 250 percent between FY 2014/2015 and FY2019/2020, while value-added tax revenues jumped by 200 percent during the same period.

He added that the total of governmental receipts (including taxes, customs, and public services) recorded EGP 735 billion since the implementation of the e-payment and collection system from 1 May 2019 to 31 December 2020, accounting for 77 percent of government revenues.

Maait disclosed that Egypt’s initial surplus recorded EGP 105.5 billion in FY2019/2020, marking the second best record in the region despite the COVID-19 pandemic.

He expounded that this surplus means that the state’s revenues cover its expenses and will be used in fulfilling the debt service payment without the need to borrow from banks as was the case in previous years.

Maait added that Egypt’s economic reform programme was designed to put the country at the forefront of states that achieve an economic growth, stating that Egypt witnessed the establishment of unprecedented mega projects in development areas driven by the robust and courageous political leadership and the support of the people.

“The economic reform programme aimed at attaining growth rates, decreasing unemployment, curbing the increase in public debt to GDP ratio, achieving a budget surplus, and phasing down the budget deficit as well as indebtedness,”, said Maait.