Egypt targets growth rate of 5.7% in 2022/23, 6% in 24/25

CAIRO - 5 January 2022: Egypt targets a growth rate of 5.7 percent of gross domestic product (GDP) during the fiscal year of 2022-2023, and to gradually hike to 6 percent in 2024-2025, according to Minister of Finance, Mohamed Maait.

Maait added that the draft budget for the fiscal year 2022-2023 will witness more spending on improving people's lives and facilitating decent livelihoods, in implementation of presidential directives.

The Egyptian minister stated in a statement, Wednesday that the priority in the "new republic" will be for effective programs in health and education. They are the mainstay of building the Egyptian person, strengthening the pillars of investment in human capital, in addition to maximizing development efforts in various fields.

He stressed that public investments will be expanded; In a manner that contributes to raising the efficiency of basic services, by proceeding with the completion of the largest project in the history of Egypt for rural development “Hayah Karima”, and raising the standard of living for 60 percent of Egyptians, in a way that enables citizens to benefit from the fruits of economic growth, in a sustainable and comprehensive manner, and creating more productive employment opportunities, while continuing to expand the social protection network; To become more targeted to the poorest classes.

The minister added that the draft budget for the new fiscal year aims to move forward in promoting the movement of economic activity, in light of the coronavirus pandemic, by carrying out broad structural reforms in various fields, in a way that contributes to pushing the private sector to lead the locomotive of economic growth, and helps in localizing the industry, increasing productivity, deepening the local component, and stimulating exports, so that efforts to create an investment climate are maximized, encouraging investors, and overcoming obstacles, in a way that supports the trend towards expansion in productive activities, attention to small and medium enterprises, manufacturing industries, and the expansion of the use of resources sustainable clean energy.

Maait indicated that, in the new budget draft, we [the government] are keen to lay the foundations for financial discipline and the sustainability of macroeconomic indicators, as we target a growth rate of 5.7 percent of GDP during the 2022-2023 fiscal year, and to gradually rise to 6 percent in 2024-2025.

He pointed out that his country aims to achieve a primary surplus of 2 percent at the medium level, and to reduce the total deficit to 6.1 percent in the 2022-2023 fiscal year, and to 5.1 percent in 2024-2025, and bring the debt-to-GDP ratio down to less than 90 percent in the fiscal year 2022-2023, and to 82.5 percent by June 2025.

It also targets to reduce the debt service ratio of total budget expenditures to less than 30 percent compared to the target of 31.5 percent during the 2021-2022 fiscal year, and extend the debt life to approach five years in the medium term instead of current three years, by expanding the issuance of various medium and long-term government bonds, and targeting new instruments such as sukuk, sustainable development bonds, and green bonds, which contribute to expanding the investor base and attract additional liquidity to the government securities market, in a way that helps reduce the cost of debt.

“Since the beginning of the pandemic, the government has prepared a balanced framework to deal with the unprecedented situation and its negative impact on the local and global economy, especially in light of the prevailing and prolonged uncertainty and the ensuing inflationary effects, disruption in the supply chain, and a global rise in the prices of commodities, basic materials and the cost of transportation, in a way that leads to the sustainability of maintaining economic, financial and social stability without eroding the gains and successes achieved by the economic and social reform program,” the minister noted.

He clarified that this will take place by targeting temporary mechanisms and measures that are flexible and able to exit from them according to developments that may occur on the economic and social level during the various stages of the crisis in the short and medium term, in addition to targeting the provision of the greatest degree of protection and support to the most vulnerable groups and the most affected economic sectors.