Back to the complete issue
Monday, 24 February 2020

FinMin to cut debt-to-GDP ratio to 79% next fiscal year -Maait

BUDGET WATCH- FinMin adopts more ambitious debt-to-GDP targets in coming fiscal year: The Finance Ministry will aim to lower Egypt’s debt-to-GDP ratio to 79% during FY2020-2021, Minister Mohamed Maait said on the sidelines of a conference yesterday, Hapi Journal reports. The new figure is more ambitious than targets announced in the ministry’s preliminary budget statement in November, which forecast debt-to-GDP falling to 80%. The statement revealed that the ministry expects GDP to grow at a 6.4% clip in the coming fiscal year, up from a projected 6% in FY2019-2020. The jury is still out over whether the government will meet this year’s target: Preliminary figures announced last week showed that the economy grew at a slower 5.6% clip during the first six months of the fiscal year.

EXCLUSIVE- The ministry is also planning to reduce its ceiling for Egypt’s external debt-to-GDP ratio to 30% in the medium term, down from 37% in FY2018-2019, according to official documents reviewed by Enterprise. The ceiling will be reviewed and adjusted on an annual basis according to economic developments. The government began implementing last March a comprehensive debt strategy, which includes moving towards longer-term debt and imposing a cap on eurobond issuances.

Fertilizers could be subject to automatic pricing mechanism now, too: Separately, the ministry is working with the IMF to draft a strategy to boost government revenues. The proposals currently under study include pegging the cost of fertilizers to global prices — which the government began doing with oil prices last year — while creating a transitional safety net for small-scale farmers that own less than five feddans. The government would provide these farmers with financial support for three years, and would gradually reduce the amount handed out each year. The financing package is expected to cost EGP 5 bn, according to the documents.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.