Egypt targets 5.7% GDP growth in FY 2022/23: Finance minister

Doaa A.Moneim , Wednesday 5 Jan 2022

Egypt targets a 5.7 percent GDP growth in FY 2022/23, which runs from 1 July, to record six percent in FY 2024/25, Minister of Finance Mohamed Maait said on Wednesday.

Construction machines in the New Administrative Capital
Construction machines and labourers work at the future headquarters of the Cabinet in the government district of the New Administrative Capital (NAC) east of Cairo, Egypt May 2, 2019. REUTERS

This target would surpass the country's pre-pandemic growth level of 5.6 percent in FY 2019/20.

The government wants to increase the budget’s initial surplus to reach two percent, up from 1.5 percent targeted in FY 2021/22, and to bring down the overall budget deficit to 6.1 percent in FY 2022/23, with an objective of decreasing this rate to reach 5.1 percent in FY2024/25, according to Maait.

The minister added that the government targets decreasing the gross debt to GDP ratio to below 90 percent in FY 2022/23, and down to 82.5 percent by the end of FY 2024/25 as well as lowering the debt service to less than 30 percent of the total budget expenditure in FY 2022/23.

Owing to the coronavirus breakout, Egypt’s gross debt jumped to exceed 91 percent of the GDP in FY 2021/22, according to the International Monetary Fund.

The targeted debt service in FY 2021/22 is 31.5 percent of the aggregate budget expenditure, Maait pointed out. 

Debt maturity is expected to extend for close to five years, on the medium term, up from the current 3.4 years, by increasing the public bond issuance, particularly the medium- and long-term ones, and issuing new bond products, including Islamic sukuk and green and sustainability bonds, according to Maait.

“This issuance would expand the investors base and attract extra liquidity to Egypt’s governmental equity market, which is expected to contribute to reducing the country’s debt cost,” Maait explained.

 Community dialogue over new budget 

The minister reiterated that the FY 2022/23 budget will be up for community dialogue, for the first time ever, starting in January, before submitting the budget’s final draft to the House of Representatives.

The dialogue will include eight sessions with the representatives of the Federation of Egyptian Chambers of Commerce, Federation of Egyptian Industries, Egyptian Businessmen Association, Egyptian Junior Business Association, Senate, and House of Representatives, in addition to governors, business councils, persons with special needs, and young people, according to Maait.

The sessions will also include a segment for media representatives, experts, professors at Egyptian universities, research centres, and think tanks.

Maait noted that the dialogue will focus on the basic strategic objectives of the FY 2022/23 budget and its financial targets, adding that the outcomes of this dialogue will be taken into account in designing the budget’s final draft.

Generally, Egypt’s FY 2022/23 budget plan targets moving ahead in boosting the country’s economic activity amid the COVID-19 crisis by implementing a wide range of structural reforms across all fields as well as drawing on the private sector to drive Egypt’s economic development, said the minister.

FY 2022/23 budget plan also centres on creating an attractive environment for the investors, backing small and medium-sized projects (SMEs), boosting medium industries as well as expanding in the use of clean and sustainable energy resources.

Maait pointed out that President Abdel-Fattah El-Sisi has instructed the government to increase expenditure on effective programmes in the health and education sectors to improve the living standard of Egyptians and enhance capital human investment.

The president also instructed the government to expand public investments, improve the quality of services, create more job opportunities, and extend the social protection net to cover the impoverished groups.

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