Egypt’s budget deficit to decrease to 8.8% this year: World Bank

CAIRO – 12 October 2017: The World Bank expected Egypt’s budget deficit to decline to 8.8 percent of the gross domestic product (GDP) in fiscal year (FY) 2017/18, the international financial institution said in a Thursday report.

The improvement in the budget deficit was attributed by the bank to the reforms made in the energy subsidies system and the hike in tax revenues.

In the current fiscal year, current transaction accounts are expected to register 4.6 percent of the GDP, the World Bank said. The World Bank added that poverty rates are forecasted to decline due to the measures taken by the Egyptian government in the social safety net, which include increasing allocations of food subsidies’ smart cards and the cash transfer system.

With the economic reform measures gaining momentum, the Egyptian economy is expected to revitalize thanks to introducing the Industrial Permits Act, which decreases the waiting period for investors to obtain a license.

“Egypt’s GDP growth is predicted to stand at 4.5 percent in 2017/18, and to grow gradually to reach 5.3 percent by 2019,” the World Bank noted.

As for inflation rates, the bank said they will fall to 23.3 percent in 2017 and 22.1 percent in 2018; reaching 14 percent in 2019.

If the current inflation rate continues, Egypt might need to tighten its fiscal policy, “which will affect the economic growth,” the World Bank said. The Bank also warned against slowing down the pace of fiscal reforms so as not to affect Egypt's credit ability in repaying international debts.