Despite COVID-19, Egypt’s budget deficit drops to 7.8% in FY 2019/20

Daily News Egypt
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Charitable foundations in Egypt are seeing a higher demand in charitable donations in the first days of Ramadan (Photo from Al-Borsa News)

Egypt’s budget deficit decreased to 7.8% of GDP during fiscal year (FY) 2019/20, down from 8.2% in FY 2018/19, according to a Wednesday cabinet statement.

Minister of Finance Mohamed Maait said the country had achieved a primary surplus of 1.8% of GDP during the fiscal year. He added that this was “a very good result amid the exceptional circumstances of the novel coronavirus (COVID-19) pandemic.”

However, Maait noted that GDP will decrease by about EGP 202bn from previous forecasts, as a result of the pandemic. Egypt’s real GDP growth recorded 3.8% in FY 2019/20, compared to the estimated 6%.

Egypt is the only country in the Middle East and Africa (MEA) region to maintain its credit rating, with a stable outlook at the big three rating agencies, Standard & Poor’s, Moody’s, and Fitch Ratings.

On Monday, Fitch Ratings announced Egypt’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) stood at ‘B+’ with a stable outlook.

Egypt’s debt-to-GDP ratio declined to 86.2% in the same period, down from 90.4% in FY 2018/19, and 108% in FY 2016/17, Maait said. The minister added that Egypt is one of the few countries to have managed a reduction in its debt-to-GDP ratio in FY 2019/20.

Moreover, the budget revenues grew by 2.3% in FY 2019/20, compared to FY 2018/19, despite the economic downturn from the pandemic, Maait stated.

Fitch expects Egypt’s GDP to stand at 2.5% in FY 2020/21, well below the average growth rate of 5.5% in FY 2018/19 and FY 2019/20.

However, the credit ratings agency noted that the country’s GDP will recover in FY 2021/22 to 5.5%, before averaging at over 5% in the medium term.

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