Egypt’s Finance Minister, Mohamed Maait, has affirmed that the state is mobilising all its capabilities to flexibly and deal with the exceptional global economic circumstances.
He added that the state aims to alleviate the living burdens on citizens while maintaining financial discipline by achieving a primary surplus and reducing deficit and debt rates to GDP.
Addressing the eighth Arab Fiscal Forum in Dubai, Maait highlighted that the Egyptian economy is achieving a balanced performance in the face of unprecedented challenges facing the global economy, including rising commodity and service prices, increased financing and development costs, and escalating geopolitical tensions.
He noted that the financial performance indicators are improving significantly, according to a precise reading of the general government budget, which includes the budget of administrative bodies and the budgets of 59 economic entities in terms of revenues and expenditures. A legislative amendment to the Unified Public Finance Law will be implemented to incorporate these economic entities.
Maait also pointed out that the view of international market investors towards the future of the Egyptian economy has started to improve, taking into account the flexible policies adopted by the Egyptian government and the structural reforms it is implementing to attract more investment flows. The required return on Egyptian bonds in international markets has decreased by 50%, and the cost of insuring these bonds has also decreased.
The Minister of Finance explained that the economic and structural reforms implemented by the government have achieved positive indicators over the past years. The overall budget deficit has declined from 12% in 2013/2014 to 6% of GDP by the end of June 2023, and is expected to decline to 5% by June 2027. A primary surplus of 1.6% of GDP was achieved during six years, reaching $173bn in the past seven months compared to $33bn in the same period of the previous fiscal year.
Maait stressed the government’s keenness to proceed with implementing the public debt management strategy, which is subject to annual updates to put debt-to-GDP ratios on a downward path. The debt-to-GDP ratio has been reduced from 108% in 2016/2017 to 95.7% in June 2023, and it is targeted to be reduced to less than 85% by the end of June 2028.
The Finance Minister also confirmed that the Egyptian government has adopted a strategy to diversify financing sources and reduce their cost by entering new global financial markets and offering facilitated financing instruments. The government successfully returned to the Japanese markets, issuing the second international Samurai bond issue worth 75bn Japanese Yen, equivalent to about $0.5bn.
Maait concluded by highlighting the government’s keenness to create a favourable business climate, including enacting many competitive incentives that support production expansions and increase the export base.
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