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Wednesday, 13 January 2021

Cloudy with a chance of…

EXCLUSIVE- Expect to see revised GDP growth targets for the current fiscal year sometime this month as the Finance Ministry takes stock of economic performance in 1H2020-2021 and amends the full-year expectations accordingly, Finance Minister Mohamed Maait told Enterprise. The ministry will not make legal amendments to the state budget, and will only announce the revised figures and targets to give an indicator of where things are headed, Maait said.

And when the revised figures are laid out, don’t take them as scripture. The changes in conditions are “extremely sharp” and it’s near impossible to accurately predict point figures, Maait said.

The figures laid out in the state budget “are not expected to be met” in the midst of the unpredictability and volatility of global conditions, Maait said. The budget had originally set GDP growth expectations for FY2020-2021 at 6.4% but this figure was revised several times as the pandemic took hold and wouldn’t go away. Maait most recently said the economy is likely to grow between 2.8% and 3.5% this fiscal year. The IMF’s projection earlier this week that we’ll close out FY2020-2021 with a 2.8% growth rate is quite positive if we look at the bigger picture, with tourism still at a standstill and aviation barely seeing any activity, the minister told us.

As for the next fiscal year, the ministry hasn’t decided whether to renew its oil hedging contracts. “We don’t know what oil prices are going to look like. Nobody really knows and the price changes are too volatile right now to even discuss,” Maait said.

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