Minister of Finance Mohamed Maait held a press conference to showcase the economic situation in Egypt and send the public a clear message of reassurance.
Maait expressed his astonishment at the attempts of some to hold the state responsible for the negative repercussions of the current global economic crisis. He said that an objective perspective at the happenings in many developed and developing countries around the world is enough to realize the extent of the impact these exceptional global challenges have on all economies. He also explained that the world is going through one of the roughest patches and times of uncertainty in terms of events and trends, along with a significant rise in the cost of obtaining financing and the cost of living.
“The performance indicators throughout last fiscal year, which ended in June 2022, answered all questions and refuted rumors. We recorded the highest growth rate since 2008 at 6.6% of GDP, compared to a global average of 3.2% for developing economies, and a decline in the unemployment rate of 7.2% in June 2022 by providing 826,000 jobs. Moreover, the budget deficit decreased from 13% in FY 2012/13 to 6.1% of GDP in the last fiscal year. The budget deficit rate, for the first time in years, is less than the average of developing countries,” he said. “We were able to achieve a primary surplus for the fifth year in a row at a value of EGP 100bn and a rate of 1.3% of GDP, so Egypt is one of the few emerging economies that achieved a primary surplus in FY 2021/22”.
He explained that the revenues of the state’s general budget increased by 19.6% compared to an annual growth rate of expenditures of 14.8%, and tax revenues increased by 18.7%. These figures reflect the government’s efforts to integrate the informal economy into the formal economy and achieve tax justice.
The Minister also pointed out that the debt-to-GDP ratio decreased from 103% in June 2017 to 87.2% in June 2022, compared to a global government debt ratio of 99% of global GDP, and the debt ratio also decreased by about 15.6% of GDP during the period from 2016/22, compared to an increase of 19.5% in developing countries. “We aim to reduce the debt-to-GDP ratio to 75% by 2026. Moreover, 77% of government debt is owed to institutions and individuals in Egypt and only 23% is owed to entities abroad in hard currency. Foreign indebtedness has stabilized at EGP 81.4bn. This debt is long-term with an average of 12 years and a cost of less than 6%,” he added.
Maait said that the size of the Egyptian economy has tripled during the past six years, at rates that exceed government indebtedness, which reflects the government’s success in directing development funds to real investments, feasible projects and initiatives that have contributed to improving infrastructure in an unprecedented way. This attracts the private sector investments, which boosts economic activity, provides jobs for citizens, and enhances the quality of services provided to them.
He pointed out that Egypt’s petroleum exports achieved $13bn, with a surplus of $4bn, during the period from July to March of last fiscal year, after the petroleum sector acted as a burden on the state, with an annual trade deficit. The remittances of Egyptians working abroad reached a new record during the last fiscal year, jumping to $32.2bn, which confirms the growing confidence in the economic conditions in Egypt. In addition, Suez Canal achieved the highest revenues worth EGP 7bn last fiscal year.
Maait stressed that the state exiting from some economic activities aims to empower the private sector and maximize its role in industrial and export activities to generate one million productive jobs annually, increase its contributions from the total implemented investments to 65%, and attract foreign direct investments of $10bn annually over the next four years. “We have sustainable energy sources, developed infrastructure and young professionals, in a way that provides the basic ingredients necessary to ensure economic stability.”
He explained that increasing agricultural and industrial production and maximizing exports is a top priority for the presidency in Egypt. Giving more attention to these sectors aims to ensure strong and sustainable growth that leads to comprehensive development, so that financial savings are directed to improving citizens’ lives and reducing government indebtedness. Last fiscal year witnessed an increase in spending on human development and social protection networks. Expenditures on health increased by 21% and education by 23%, which exceeds the annual growth rate of budget expenditures estimated at 14.8%, reflecting the priority given by the government to these two vital sectors.
He pointed out that the subsidy for food commodities was increased by about 17% during the last fiscal year to reach EGP 97bn, and the value of pensions increased by 70% during the period from 2018 to 2022, which benefited 10.5 million citizens. The public treasury of the state is planned to repay EGP 190.5bn for pensions with an annual growth rate of 5.9%.
He explained that more than EGP 542bn were transferred to pension funds throughout 38 months to disburse pensions and increase the solvency of the pension system. Spending on salaries was increased to EGP 400bn in the budget of this fiscal year, and as of next September, the number of families benefiting from cash support will be increased to 5 million, about 20 million citizens, at a total cost of EGP 25bn annually. Exceptional aid packages will be disbursed for 9.1 million low-income families for six months with a monthly cost of more than EGP 900m and a total of EGP 5.5bn.
