Minister of Finance, Mohammed Moait, giving a speech during BT100 ceremony: photo via Egypt Today
CAIRO - 3 March 2020: The Egyptian minister of finance, Mohamed Moait, said Tuesday during his speech at bt100 ceremony that the public debt rate will witness a drop to 77.5 percent in June 2022.
The minister gave other heads up on the Egyptian economy that is going through a stable condition after years of struggling.
The minister of finance said that the Egyptian economic reform program formed a basic pillar to maintain a balanced and sustainable growth path, pointing out that the Egyptian government started, since 2016, to implement a comprehensive economic and social reform program, aimed at restoring the stability of the Egyptian economy and achieving sustainable growth that all the social classes in Egypt can reap its benefits.
In his speech at the BT100 celebration, the Minister of Finance added that the economic growth rate reached 5.6% in the fiscal year 2018-2019, which is the highest growth rate since the global financial crisis in 2008 and one of the highest growth rates among emerging markets this year, and the Egyptian government is targeting in this year's budget a growth rate of about 6% that should reach 7% by 2022.
Moait stressed that the approved economic and financial reforms led to more diversified growth by stronger investment performance not only the year but mainly in the private sector, and the improvement of the net exports performance, as both became the main engine of growth since the fiscal year 2017/2017, which led to the creation of more real job opportunities in the markets and reduce unemployment rates to less than 8% in the recent period.
He pointed out that achieving financial control led to a first surplus of 0.1% of GDP in 2017/2018 for the first time in 15 years, which reached 2% in 2018/2019, stressing that the ministry aims to maintain this rate in the medium term, noting that the first surplus in the first half of FY 2019-2020 reached 0.5% of GDP, compared to 0.4% in FY 2018-2019.
He confirmed that the total deficit in the downward path is expected to continue to reach 7.2% in the fiscal year 2019/2020 and 6.2% in 2020/20, saying "the total deficit reached in the second quarter of the current fiscal year to 3.8% of GDP compared to 3.6% in 2018/2019 due to strong efforts to redefine spending priorities and improve the efficiency of tax revenue collection. "
"The achievement of financial control came mainly on the basis of the continuation of the increase in the proceeds of tax revenues from non-sovereign entities, where the Ministry of Finance targets an annual increase in non-sovereign taxes by 0.5% of GDP, and this percentage increased last year about 1% of the output to reach 14% of the GDP," Moait said.
He added that there is still a wide scope for generating additional tax revenues as the global average for this percentage reaches about 25% of the output.
Moait pointed out that the ministry will continue to improve the structure of public spending, which supports the achievement of a sustainable growth path, pointing out that spending on health and education has been increased in exchange for reducing spending on energy subsidies, "oil and electricity" in the FY 2019-2020 budget project, as spending on education in the 2019/2020 budget reached 132 billion pounds, while health spending reached 73.1 billion pounds, support for petroleum materials recorded 53 billion pounds, and electricity subsidies to 4 billion pounds.
He confirmed the increase in spending on investments in the state budget from 2.5% of GDP in 2017/2018 to 2.6% in 2018/2019 to reach 3.4% in the 2019/2020 budget, saying " This comes as a result of the Egyptian government's position of social protection as a main pillar of the economic reform program, as the government continues to work to strengthen the social protection network for the poorest classes in society, by developing more efficient and better targeted social safety nets, restructuring support programs, and increasing spending on Human Development".
The minister affirmed that the Ministry is making efforts to achieve social justice such as the gradual shift from in-kind support to cash and quasi-monetary support to ensure better targeting of support recipients, increase allocations to programs and initiatives related to the health sector, and clean the database of beneficiaries of food support to ensure better targeting, more efficient spending and implementing a comprehensive pension reform program to ensure their financial sustainability.
He said that the Ministry of Finance made great efforts regarding public debt, which had reached huge rates of 108% in June 2017, by reducing the total deficit and formulating a new and effective strategy in dealing with government public debt, and as a result the public debt rate has been reduced to 90.3% this year, and it is expected that it will achieve about 83% in this year's budget, to decline to less than 77.5% by June 2022.
Moait added that the debt service costs have been reduced in the medium term, due, among other factors, to the continued efforts to extend the debt maturity period to 3.3 years in June 2019, which is expected to reach 5 years by June 2022.
He pointed out that the liberalization of the exchange rate led to a noticeable decrease in the current account deficit driven by the improvement of foreign exchange flows and the increase of foreign investments in local treasury bills and bonds since the beginning of 2019. In addition, the net foreign exchange reserves reached about 45.5 billion dollars at the end of January 2020, which covers about eight months of imports.
He indicated that the Egyptian government is fully committed to continuing the implementation of the comprehensive and ambitious economic reform program to unleash all of Egypt's untapped economic potential, and to maintain comprehensive and sustainable growth rates led by the private sector, and that leads to the creation of real, sustainable and capable job opportunities, absorption of new entrants from youth in the labor market, pointing out that the government is moving forward in pushing the agenda of structural reform to enhance the competitiveness of the Egyptian economy with a focus on promising economic sectors, the most important of which is the labor-intensive industrial sector and export-oriented activities, in addition to providing more opportunities for the private sector and open the door in front of it to invest in sectors dominated by the government for many years, led by the energy sector, and public transport sector.
“The structural reform agenda includes an important number of measures aimed at achieving comprehensive and sustainable growth driven by the private sector, and on top of it is a new package of export support measures that includes clear key performance indicators to create a broader, more diversified and competitive export base," said Minister of Finance Dr. Mohamed Moait. “And adopting a modern system for allocating industrial lands and applying the new government procurement law, which enhances transparency and competition, as well as applying a modern and simplified tax system for small and medium-sized companies to encourage investment in this field, support small investors and integrate the informal sector into the official, in addition to modifying the protection of competition law in order to strengthen the independence of the institutional, financial and operational with enhanced accountability and transparency, and also aims at the Ministry of Finance during the coming period to strengthen their capacities in risk management through the publication of an annual report on the financial performance of all companies lists state-owned to strengthen the accountability of public institutions.
The minister indicated that the Egyptian government will continue to work to create real and productive jobs as the most effective way to distribute the positive impact of the economic reform program to all layers of Egyptian society, in addition to enhancing and improving the efficiency and effectiveness of social protection programs.
He pointed out that the government's priority during the coming period is to enhance human capital through an efficient and effective application of the comprehensive health insurance system, reform the Egyptian education system, and proceed with administrative reform to improve the provision of public services and government productivity.
"The road ahead is still a long way, but we have already taken real, concrete steps and of course successful. We are confident that our continuous commitment and continuous efforts will be reflected in improving and developing all the main axes of the Egyptian economy and will encourage the private sector to participate in the process of economic and social renaissance, " added Moait.
It is worth noting that the BT100 celebration enjoyed for the third year in a row under the auspices of the Egyptian Cabinet, due to the overwhelming success achieved by the celebration over the past two years and the endorsement by the Egyptian government represented by the Cabinet and the private sector in all its sectors with the supreme goal of “bt100” which shed light on the efforts and achievements made by the state in its various sectors.
“Bt100" is a different model in the financial and business community, as the organizing committee was keen to develop the submitted content and research on constructive standards that are in line with the state's standards for development and reform, in order to shed light on the companies that deserve praise, as a result of what they provided to the Egyptian community and the economic system.