Budget deficit could widen to 7.8% due to covid-19 -Maait: Egypt’s budget deficit could widen to 7.8% of GDP in FY2020-2021 if the covid-19 pandemic continues until the end of the year, Finance Minister Mohamed Maait warned yesterday. The government currently expects to narrow the deficit to 6.3% in FY2020-2021.

Primary surplus to fall, debt to rise: The primary surplus will fall to just 0.6% in the coming fiscal year if the crisis continues through to December compared to the 2% surplus currently expected by the government, Maait said. Debt would rise to 88% of GDP under this scenario from current projections of 83%.

This is actually a slight improvement on previous forecasts: Budget forecasts released last month predicted almost identical figures should the crisis last until July, signifying that the government now believes that the short-term impact of the pandemic on public finances may not be as severe as previously thought.

Gov’t likely to miss its budget targets this year: The budget deficit will likely widen to 7.8% or 7.9% in the current fiscal year instead of the 7.2% targeted prior to the covid-19 outbreak, Maait said.

GDP forecast was also cut this week: The government earlier this week lowered its GDP projection for the coming fiscal year to 2% from 3.5%, should the pandemic last until the end of the year.

The IIF is now forecasting the economy to grow by 1.6% in the state’s current fiscal year: The Institute of International Finance (IIF) expects the economy to contract by 2.5% during the second half of FY2019-2020 after growing at a 5.4% clip in the first six months of the year, it wrote in a note on Sunday.