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Tuesday, 5 November 2019

FinMin revises Egypt’s public debt target for FY2020-2021 again

FinMin sets more ambitious public debt reduction target, but more conservative GDP growth estimate, for FY2020-2021: The Finance Ministry is expecting Egypt’s public debt levels to drop to 80% of GDP during the next fiscal year — a more ambitious goal than the ministry had announced in June, Minister Mohamed Maait told the local press. The Finance Ministry had initially set its sights on bringing public debt to 80% of GDP by FY2020-2021, before revising its target to 84.8% in official documents seen by Enterprise earlier this year. The government began in March implementing its comprehensive debt reduction strategy, which relies largely on a gradual shift toward longer-term debt and diversifying its debt instruments.

The government is also forecasting GDP growth at 6.5% in FY2020-2021, up from a target of 6% for the current fiscal year, the domestic press reports. The ministry had initially forecasted 7.2% GDP growth for FY2020-2021. We reported in early June that the Finance Ministry was looking to revise its 2020-2021 growth target downward to 6.5%, which we said at the time officials believed was a “more realistic” medium-term target given the headwinds then building in the global economy. The IMF and World Bank’s annual meetings in Washington, DC, last month subsequently rang warning bells about slowing global growth.

In other news from the Finance Ministry: The government has begun working on Egypt’s new unified tax digitization system, according to a Cabinet statement. The new system is meant to streamline procedures and encourage informal businesses to go legit. IBM is designing an integrated model for the automated system, while e-Finance, SAP, and Ernst & Young also have pieces of the project. The government expects to roll out a beta model for large-scale taxpayers before gradually expanding the system to encompass all tax payments.

Background: The project is part of the new unified tax payment system that creates a single tax filing system for income tax, stamp tax and VAT. The Madbouly Cabinet has greenlit the proposed legislation introducing a unified system and pave the way for a new electronic billing and tax payment platform.

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