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Tuesday, 12 November 2019

Finance Ministry eyes 6.4% growth in FY 2020-2021

BUDGET WATCH- FinMin says it’s targeting 6.4% growth, 6.2% deficit next fiscal year: The Finance Ministry is eyeing GDP growth of 6.4% in FY2020-2021, up from a targeted 6% for the current fiscal year, according to the ministry’s preliminary budget statement announced by cabinet yesterday. Local press reports had suggested last week that the ministry would pencil in 6.5% growth in next fiscal year’s budget, after initially forecasting GDP growing at a 7.2% clip. The ministry is also planning to narrow the overall budget deficit to 6.2% in FY2020-2021, from an expected 7.2% this fiscal year. On the public debt front, the ministry is expecting Egypt’s debt-to-GDP ratio to drop to 80%, as last week’s press reports had indicated.

How does this compare to current figures? Egypt’s economy grew by 5.6% in 1Q2019-2020. Economists polled by Reuters are expecting growth to come in at 5.7% in the next (2020-2021) fiscal year. The debt-to-GDP ratio stands at 90%, falling from a targeted 93% in FY2018-2019, while the deficit fell below the government’s target of 8.4% for the current fiscal year.

The ministry also plans to hold “national dialogue” (government-speak for consultations with a range of stakeholders) to talk about issues including cross-border trade, customs reforms, and accelerating spending on healthcare, education, and social housing, according to the statement.

The ministry was also out with its monthly report for September yesterday. Among the highlights were a slight improvement in y-o-y fiscal performance between July and August, a period during which the budget deficit was down to 1.3% of GDP from 1.6% in the same period last year. The ministry also achieved a primary budget surplus of EGP 2.3 bn in the period, up from EGP 1.9 bn in the corresponding two months of last year. Total revenues also grew at a faster pace (6.5% y-o-y) than total expenses (0.6%). Al Shorouk has a neat roundup of the key figures. You can also visit the report’s landing page here.

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