FinMin revises its deficit, debt figures for the current fiscal year: The Finance Ministry now expects the budget deficit and debt-to-GDP ratio to increase during the current fiscal year as the impact of the EGP devaluation and rising borrowing costs squeeze public finances.

Budget deficit to rise: The Finance Ministry now expects the budget deficit to rise to 6.8% of GDP this year, from 6.1% last year, according to its mid-year review (pdf) for FY 2022-2023, which ends in June. The government had initially targeted a 6.1% deficit in the state budget. The budget deficit came in at 4.0% in the first half of this fiscal year. The revised figure for this fiscal year is in line with the latest forecast from S&P Global, which sees the deficit remaining high at roughly 7% of GDP over the next three years.

Debt-to-GDP is set to inch back up, too: The ministry is now predicting a debt level of 93.0% of GDP by June 2023, up from an earlier 84.0% target. Total debt-to-GDP declined to 87.2% by June 2022 from 90.6% a year earlier. The government wants to bring down the debt-to-GDP ratio to 75% by FY 2025-2026.

Debt + imports are getting pricier: Rising interest rates, higher commodity prices, and the impact of the EGP devaluation on the country’s import bill are all putting pressure on the public purse. The projected average interest rate on government bonds and bills this fiscal year has risen to 18.0% from the 14.5% estimated in the budget, while the prices of oil and wheat have risen above the benchmark price used to calculate the budget.

GDP growth is set to come in at 4.0-5.0% for the 2022-2023 fiscal year, leaving room to improve on the 4.0% growth the government predicted in a November letter of intent (pdf) sent to the IMF to secure its USD 3 bn loan. The Madbouly government sees growth clocking in at 5.5-6.0% in the medium term.

Everyone agrees: The IMF, the European Bank for Reconstruction and Development, a recent Reuters poll, the World Bank, and Fitch ratings are all predicting growth in the range of 4.0-4.8% this fiscal year.

What’s next: The ministry will present the draft FY 2023-2024 budget to the House of Representatives by 31 March,