Thursday, October 21, 2021
Books – Mustafa Eid:
The Minister of Finance, Mohamed Maait, said that the decision of Fitch Ratings to fix Egypt’s rating at (B+) with a stable outlook, for the third time during the Corona crisis, embodies the strength and diversity of the Egyptian economy, and its ability to deal positively with the repercussions of the Corona pandemic, unlike most economies. peer and emerging.
The minister added that the government is successfully achieving positive financial indicators, as a result of the elaborate implementation of the economic reform program, in a way that prompts international institutions to renew their confidence in the solidity of the Egyptian economy.
He stated that the implementation of the structural reform program is a top priority for the government; To improve the business climate and increase local and foreign private sector investments in all fields, especially in development projects such as infrastructure, education and health.
The minister explained that the program also aims to improve the competitiveness of Egyptian products and maximize the proceeds of Egyptian non-oil exports in a way that contributes to improving the trade balance and building a strong industrial base.
He pointed out that the economic and financial reforms implemented during the past years gave the Egyptian economy a sufficient degree of flexibility, which contributed to providing a strong and diversified domestic financing base and a high foreign exchange reserve balance, in a way that helped finance the country’s needs in both local and foreign currencies despite the continuing Corona crisis and its negative repercussions on the global economy. .
The Egyptian economy recorded a positive growth rate of 3.3% during the last fiscal year, and Fitch expects to continue achieving strong growth rates in the medium term, reaching 5.5% by 2022-2023, according to the statement.
The minister said that this comes in light of the recovery of tourism and aviation, especially in light of the return of Russian, English and Italian tourism to the Red Sea region, and an increase in the contribution of several other sectors such as the technology and communications sector, health and government services.
He added that the achieved economic growth was supported by balanced economic and financial policies over the past years, as the primary surplus in the public budget was maintained through savings on the expenditure side.
The minister stated that the Fitch report expects the debt-to-GDP ratio to drop to about 86% by next June, and to achieve a primary surplus close to 1.5 percent of GDP during the current fiscal year, and 2% of GDP in the medium term.
He explained that this is supported by the continued implementation of the strategy of efficient debt management in the medium term, which contributes to reducing the financing needs of the public budget to less than 30% of the GDP. In a way that is reflected in reducing the cost of debt servicing.
The minister indicated that the medium-term revenue strategy will continue to be implemented, which aims to increase tax revenues by 2% of GDP by the end of 2024, by continuing to improve tax administration and expanding the implementation of automation and electronic tax collection projects.
Ahmed Kjok, Deputy Minister for Financial Policies and Institutional Development, said that the balanced fiscal policy has enhanced the Egyptian economy’s ability to achieve strong financial indicators represented in achieving a primary surplus of 1.45% of GDP, which is one of the largest surpluses of the primary balance achieved by emerging countries during The previous year, and reduced the total deficit to about 7.4% of GDP, compared to 8% in the fiscal year 2019-2020.
Kjok added that the strong performance of the public financial indicators reflects the improvement and recovery of economic performance; As a result of the proactive approach to dealing with the pandemic, a package of stimulus and preventive financial measures has been allocated about 2% of GDP to support the economic sectors and the most affected groups.
He pointed out that the implemented financial reforms and policies contributed to reducing the debt service bill from 10% of GDP during the fiscal year 2018-2019 to 8.8%, extending the life of the debt and maintaining investment returns in government securities, which contributed to reducing the total financing needs of the budget and its organs. .
Kjok stated that Egypt’s accession to the G-Index. with me. Morgan, by the end of next January, will support, according to the expectations of Fitch, the injection of new additional investments into the Egyptian government securities market, including treasury bills and bonds, increasing liquidity levels, enhancing the demand for Egyptian government debt instruments, and then reducing their cost.
He explained that Fitch experts expected the government’s ability to continue efforts to reduce the budget deficit during the fiscal year 2021-2022 to 6.7% of GDP, and to continue achieving an initial surplus of about 1.5% of GDP.
He stressed that the Corporation’s report reviewed the most important measures taken by the government to maintain financial goals, such as re-rationing spending, increasing allocations to the health and education sectors, the Takaful and Karama program, which provides cash transfers to the neediest groups, and increasing the budget allocations for export support.
The report also positively addressed the measures taken by the government to expand the tax base through the application of the electronic invoice, which helped reduce tax evasion and evasion, and expand the tax base, according to Kjok.