Egypt’s debt service burden could be a significant headwind to our economic growth -Moody’s: The country’s economic growth agenda could be threatened by the government’s interest bill — estimated at 9% of GDP in FY2019-2020 — “which adds rigidity to the budget,” Moody’s said in its North Africa 2020 outlook report (paywall) last week. The ratings agency expects the debt servicing burden to soften in 2020, but sees debt affordability continuing to be exposed to “idiosyncratic shocks,” and the EGP’s continued appreciation as an obstacle to competitiveness. Bonds & Loans also has the story.

The ratings agency expects Egypt’s ratio of debt-to-GDP to fall to 82.3% this fiscal year, down from a peak of more than 103% in FY2016-2017, and continue to dip further to 76% in FY2021-2022. This is close to expectations announced by the Finance Ministry late last year, which sees Egypt’s public debt levels dropping to 80% of GDP by the end of June 2021. You can get a refresher on the government’s debt targets here.

BUDGET WATCH- Egypt recorded a primary surplus of 0.5% of GDP in 1H FY2019-2020, according to preliminary figures revealed by Finance Minister Mohamed Maait yesterday. The number represents a slight improvement from the previous fiscal year when the government generated a 0.4% surplus in the first six months. The state budget targets a primary surplus of 2% of GDP over the full year. Maait made no mention of the government’s overall fiscal performance (including interest payments) over the first six months of the fiscal year, but revealed that government spending increases had significantly outpaced revenue growth, with expenditure rising 8.2% y-o-y and revenues growing 0.5% y-o-y.