Egypt is targeting a primary balance to GDP ratio (initial surplus) of 1 percent in FY2020/21 and a 1.5 percent in FY2021/22, Minister of Finance Mohamed Maait announced.
Maait made his statements on Wednesday, a day after the launching of Egypt’s second wave of economic reforms that concentrate on structural reforms in a number of sectors.
Egypt will adopt a package of structural reforms on the level of macro fiscal policies that aim to achieve financial stability, rein in budget deficit to GDP ratio, curb the public debt to GDP ratio, keep a sustainable economic growth rate, and uplift public revenues collection efficiency and ensure its well-management, according to Maait.
The macro fiscal structural reforms are expected to boost spending objects on development projects and back economic sectors and the segments most-hit by the pandemic.
He added that the government has launched the second wave of its economic reform programme after the significant success of the first phase of the programme as attested to by international financial institutions and global credit rating corporations.
Maait stressed that the new wave of reforms does not imply any additional burdens on citizens.
On Egypt’s FY2021/2022’s — which starts in July — key targets, Maait said budget deficit to GDP ratio is expected to decrease to 6.7 percent, down from the projected 7.07 percent in the current FY2020/2021.
In this regard, Egypt’s budget deficit to GDP ratio recorded 12.5 percent in FY2015/16, while initiating the economic reform programme and declined to 7.9 percent in FY2019/20, Maait illustrated.
On the other hand, government indebtedness declined by 20.5 percent of GDP over three years to reach 87.5 percent by the end of FY2019/20, down from 108 percent by end of FY2016/17, and it is expected to increase slightly to 89 percent by end of FY2020/21 and to maintain this level in FY2021/22, according to Maait.
He noted that the finance ministry will draft a medium budget, for the first time, that includes the FY2021/22 draft budget and two other draft budgets through FY2023/24, which will all be submitted to parliament.
On the legislative side, Maait stated that the public budget law and government accountancy law, which govern Egypt’s fiscal performance, were merged into the unified public finance law to keep up with the recent global developments in this regard.
He added that the unified public finance law aims to rationalise public money management through a number of procedures, including uplifting financial performance efficiency in ministries and other state-bodies and setting spending objects priorities.
On Tuesday, Egypt announced the launch of the second phase of its economic reform programme, which shifts focus on structural reforms, after a wrap-up of the first phase of the International Monetary Fund (IMF) backed economic reform programme that has been in progress since 2016.
Dubbed the ‘National Structural Reform Programme’ (NSRP), the three-year structural reform phase aims to back the economy and bolster comprehensive and sustainable growth.
In May 2020, Egypt submitted a request to the IMF to obtain a loan worth $5.2 billion, under the stand-by agreement (SBA) programme to back its structural reform programme amid the heavy pressure the COVID-19 outbreak imposed on Egypt’s finances.
So far, Egypt has received two tranches of the loan, worth $3.6 billion, and it is expected to get the third tranche in June 2021 after completing the final review of the loan programme, which will be conducted by the IMF in May.