Finance Minister Mohamed Maait said Sunday that Egypt aims to cut the public budget deficit to only four percent; a figure that has not been achieved for 42 years.
Addressing Egypt’s 2022 Economic Conference, the minister added that the average budget deficit in Egypt for 42 years has reached 7.9 percent. “The best figure was achieved after the Gulf War when debts were dropped, bringing the budget deficit to only 5 percent.”
The budget deficit for Egypt in the emerging market reached 5.4 percent, while the current budget deficit stood at 6.1 percent, Maait said.
Egypt did not achieve a budget surplus in 42 years until 2017-18, before continuing to achieve a fiscal surplus until 2022 at 1.3 percent, he added. “A surplus of 2.3 percent is expected to be reached in the 2026-27 fiscal year.”
The lowest debt that Egypt recorded over the past 42 years was 78.7 percent of the GDP, while the maximum debt reached 159 percent, the minister said.
Before Covid 19, Egypt was moving toward achieving the lowest public debt at 80.2 percent, but the pandemic and economic crisis caused us to stop at this point, and then we reached 87.2 percent, he added.
Egypt aims to reach a debt of 72 percent in the next five years, to be the lowest level in 42 years, the minister said.
Finance Minister Mohamed Maait said tax revenues have jumped to three-quarters of public revenues, from two-thirds previously.
He added that the most important development in the expenditure structure is spending on investments, while the subsidy structure is now distributed to more useful items instead of the energy sector, which was previously swallowing 70% of the total subsidy allocations.
The minister warned of challenges related to global inflation, which reached 9.1%, and the rise in interest rates in the US, which reached 3.15%, with expectations to reach 5.5%, which affects the depreciation of currencies worldwide, and also leading to a higher cost of financing, more difficulties of accessing international markets, and a higher cost of basic needs.
He also highlighted internal challenges represented in the need to maintain sustainable development rates, as well as control overpopulation and inflation rates.
The state aims to reduce general government debt for international institutions to 72% by 2026-27, compared to the current figure of 85.2%, Maait said.
The total deficit in 2015-16 reached 12.5%. This year we ended with 6.1% and in 2026-27 we target a surplus of 4%, he added.
The public debt in 2015-16 was 103%. We ended this year with 87.2% and we aim to reach 72%, the minister said.
To reach the goal, the state has developed a plan targeting an annual revenue growth rate of no less than 20% and maintaining a revenue growth rate of not less than 12%, he added.
Source: State Information Service Egypt