Wed, 24 Nov 2021 - 06:19 GMT
Wed, 24 Nov 2021 - 06:19 GMT
FILE PHOTO: Finance Minister Mohamed Maait speaks during a news conference in Cairo, Egypt July 5, 2018. REUTERS/Mohamed Abd El Ghany/File Photo
CAIRO - 24 November 2021: Egypt’s economic transformation within 7 years has exceeded expectations, and had it not been for the Corona pandemic, the state would have achieved a growth rate of 5.5 percent during the fiscal year 2019/2020, and 5.9 percent during 2020/2021, according to Minister of Finance,Mohamed Maait.
Maait clarified that this is the result of the careful implementation of harmonious and balanced financial and economic policies.
The Egyptian minister said in a statement, Wednesday, that balanced policies have made the Egyptian economy more attractive to local and foreign investments, in a way that reflects the state's keenness to maximize the participation of the private sector in the development process, as a major driver of job-rich growth, in a way that contributes to strengthening the macroeconomic structure.
This came in an open dialogue with representatives of the international investment community during the fourth session of the “Egyptian Economy Day” conference, organized by the Financial Group “Hermes”, the leading investment bank in emerging and frontier markets and the first comprehensive bank in Egypt, entitled: “Mapping the future of the investment landscape.”
He noted that the budget for the current fiscal year aims to achieve a balance between supporting economic activity, especially manufacturing and exporting, maintaining fiscal discipline, and lowering the government debt-to-GDP ratio. “It also aims to boost spending on health, education and social protection,” he added.
LE 19 billion were allocated to fund the “Takaful and Karama” program, and the value of the annual premium to the National Social Insurance Organization, as part of an agreement to resolve entanglements with the Ministry of Social Solidarity to pay the insurance fund dues accumulated over half a century hit LE 180 billion, according to the minister.
The Egyptian minister pointed out that the project to develop the Egyptian countryside “Hayah Karima”, which aims to change the face of life on the land of Egypt, is considered the best application of sustainable development goals around the world, according to the United Nations, as it contributes to raising the most comprehensive economic growth rates and impact on people’s lives ; It leads to an improvement in the standard of living of 58 percent of Egyptians with investments estimated at LE 800 billion within 3 years.
Maait explained that the economic reforms enabled us to deal flexibly with the repercussions of the Corona pandemic, in a manner that won the praise of international financing and classification institutions, as a proactive package was allocated at a rate of 2 percent of GDP to stimulate economic activity and support the sectors and groups most affected.
The International Monetary Fund has confirmed that Egypt was one of the most effective and efficient countries in spending the packages supporting the economy in the face of the “pandemic”, noting that “Moody’s, Fitch, and Standard & Poor’s” institutions decided to maintain Egypt’s credit rating with a stable outlook in light of the Corona crisis. At the time, it downgraded the credit rating or made a negative adjustment to the future outlook of many African and Middle Eastern countries.
He pointed out that Egypt was able to record the second largest primary surplus in the world at 2 percent of GDP during the 2018-2019 fiscal year, compared to a primary deficit of 3.5 percent in the 2013-2014 fiscal year, and it continued to achieve a primary surplus despite the “pandemic” of 1.8 percent during 2019-2020, and 1.46 percent of the GDP in the last fiscal year, and the government aims during the current fiscal year a surplus of 1.5 percent, and 2 percent of the GDP in the medium term.
He pointed out that the budget deficit decreased from 12.5 percent in the 2015-2016 fiscal year to 7.4 percent during the 2020-2021 fiscal year, and they aim to go down during the current fiscal year to 6.7 percent and less than 5.5 percent in the medium term.
The minister stressed that the average global indebtedness of emerging countries increased by about 17 percent and the major countries by about 20 percent during the “pandemic”, while the ratio of debt to Egypt’s domestic product witnessed a slight increase despite the unprecedented expansionary development policies adopted by Egypt, where the debt rate reached about 91 percent at the end of the fiscal year 2020-2021, which is a lower rate than the recorded for some European countries, and we aim to reduce the debt-to-GDP ratio to 89.9 percent by next June, to reach 85 percent in June 2024.
The government is seeking to adopt a medium-term strategy; In order to maintain the downward path of debt service, which fell from 40 percent at the end of 2020 to 36 percent in June 2021, and we are targeting 32 percent during the current fiscal year budget, the government has succeeded in prolonging the debt life from less than 1.3 years before June 2017 to 3.4 years in June 2021, and it is targeted to reach 3.8 years in the current fiscal year, and up to 5 years in the coming years.
The minister indicated that we are continuing to develop the state's public financial management systems, aiming to enhance the governance of expenditures and revenues, raise the efficiency of public spending, and maximize the use of state resources, explaining that for the first time in emerging countries, Egypt is developing a medium revenue strategy in which we aim to increase tax revenues by 2 percent of GDP in 4 years by maximizing efforts to integrate the informal economy into the formal economy, expanding the tax base, and collecting public treasury dues. The linking of tax and customs databases is scheduled to be completed before the end of next year.
He explained that the projects of digitizing the tax system have made us more able to integrate the informal economy into the formal economy, as Egypt was one of the first countries in the Middle East and North Africa to implement the “electronic invoice system.” More than 4239 companies have raised more than 82 million invoices, at a daily average rate of more than half a million invoices electronically since its launch, until now.
He stated that the "unified automated tax procedures" system was launched in the centers of senior and middle-income financiers and senior liberal professions, last January, and in 10 missions in the "Cairo fourth" region, last September, which contributes to providing services to financiers or taxpayers electronically without the need to go to the missions. By going to the electronic portal of the Egyptian Tax Authority with the unified tax registration number for each of them, which includes all types of taxes subject to it, and making payments electronically by one of the non-networking means of cashless payment.
The minister added that the customs system is witnessing remarkable progress in the development and mechanization processes, based on modernizing the legislative structure by issuing the new customs law, which contributes to the optimal use of advanced technology and the localization of distinguished international experiences in the application of the “single window” system, and the transition from a paper-based work environment to digital, This will help simplify the procedures, reduce the cost of the import and export process, facilitate international trade, and reduce the time for customs release; In order to enhance the improvement of Egypt’s classification in 3 important international indicators: “global competitiveness, doing business, and the macroeconomic environment,” pointing to the decrease in the customs release time further with the application of the “ACI” system of pre-registration of shipments.