FILE - Minister of Finance Amr El-Garhy
CAIRO – 6 May 2018: The Ministry of Finance is working on a medium-term plan to decline the public debt from 107-108 percent in fiscal year 2016/2017 to reach 80 percent by 2020, Minister of Finance Amr el-Garhy said.
Garhy clarified that this decline will be reached through decreasing the budget deficit, achieving a primary surplus of 2 percent of gross domestic product (GDP) and increasing average per capita income.
This came during the “Inclusive Growth and Job Creation Conference” organized by the International Monetary Fund (IMF), in cooperation with the government and the Central Bank of Egypt.
Garhy said that the Egyptian economic reform program aims to accelerate the growth rate to range between 5 percent and 6 percent.
The minister added that the public debt was doubled five times during the last five years from LE 700-800 million, adding that this uptrend will continue during the upcoming period.
He expected Egypt to witness a remarkable rise in living standards during the next fiscal year.
Regarding interest rates, the minister said that the government and the Central Bank of Egypt are working together to reduce the public debt and the interest rates, expecting the interest payments to gradually decline to 25 percent of the total expenditures over the medium term.
He added that Egypt is working on developing the small enterprises sector by 10-15 percent, clarifying that one of the most important laws and procedures that the government is currently working on is a simplified system for tax accounting for small projects to integrate them into the formal economy.
The government is also working to increase Egypt's share of world trade through the expansion of exports, especially in non-petroleum commodity products, as its total exports didn’t exceed $20 billion in 2015.
He pointed to the government's support for the development of various Egyptian industries, especially the feeder industries, in order to expand the industrial base in Egypt and its contribution to the GDP, which currently ranges between $20 and $30 billion annually.
IMF delegation arrived in Egypt this week to review Egypt’s progress on economic reforms, before it disperses the fourth tranche of the $12 billion loan deal.
The IMF’s executive board approved in November 2016 a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.
Egypt floated its currency in November 2016; losing 50 percent of its value, as part of the economic reform program.
Egypt had embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, all with the aim of trimming the budget deficit.
The IMF expected earlier that Egypt will record a GDP of 5.2 percent in the current fiscal year and to reach 5.5 percent next year, with an increase of 0.7 percent and 0.2 percent, respectively.
The IMF further anticipated the GDP to record 6 percent in 2023.