CAIRO – 20 April 2017: Egypt’s general government debt is projected to surge to 100.4 percent by the end of fiscal year 2016/17 (to end June 30) up from 97.4 percent a year earlier, the International Monetary Fund (IMF) said Thursday.
Facing increasing and chronic economic troubles, Egypt’s authorities launched an ambitious reform program, endorsed by the IMF in November to reinstate macroeconomic stability and promote inclusive growth to revive an economy hit by political instability and regional security concerns since 2011.
One key target of Egypt’s reform program is to restrain a high budget deficit and public debt, a goal that many governments have tried to achieve since President Abdel Fatah al-Sisi’s inauguration in July 2014.
The fund expects the general government gross debt to slide to 95.2 percent, and 93.6 percent over the next two fiscal years respectively, according to the Fiscal Monitor report issued on the occasion of the joint meetings of the IMF and World Bank set to kick off April 21 in Washington.
General government net debt is likely to ease from 93.6 percent in 2016/17 to 89.7 percent and 88.9 percent in the next two fiscal years, according to the report.
During the six years following the 2011 revolution, public debt leapt from 70 percent of GDP in 2009/10 to 95 percent in 2015/16. The overall fiscal deficit also widened from eight percent of GDP to 10- 13 percent.
The fund expects budget deficit to slow down to 9.8 percent in 2017/18, down from 10.9 percent projected by the end of 2016/17.
The primary deficit is forecast to record 2.6 percent of GDP in 2016/17 and 0.1 percent in the next year, compared to 4.1 percent a year earlier. However, the gap is likely to turn into a surplus of 1.3 percent of GDP in 2019/2020.
General government revenues will rise from 22 percent to 22.3 percent in 2017/18. Expenditure is set to decline to 32.1 percent of GDP from 32.9 in the current fiscal year.
As is the case with growth-friendly policies, inclusive policies can be implemented without increasing the overall budget envelope and the fiscal deficit. In countries with limited or no fiscal space, inclusive policies would have to be accompanied by offsetting measures.
“Full implementation of the value added tax and tax administration reform could free resources for higher spending on health, education, and social protection,” said the IMF.