Egypt's fiscal deficit to narrow to 6.4% in 2019/20: Fitch Solutions

NEW YORK - 12 December 2018: Egypt's fiscal deficit will continue to shrink in the coming years as robust economic growth and fiscal reforms bolster revenues and help to temper expenditure growth, Fitch Solutions expects.

In a fresh report Tuesday, the agency said Egypt has already implemented significant fiscal reforms in recent years. "As a result, we believe that Egypt recorded a primary surplus of 0.2 percent of GDP in FY2017/18, the first time the country has run a primary surplus since FY2003/04."

We expect the country;s primary surplus to rise to 2.1 percent of GDP in FY2018/19 and 2.3 percent of GDP in FY2019/20, the report added.

While elevated debt servicing costs mean that Egypt will continue to run overall fiscal deficits in the coming years, we expect these to shrink from 9.4 percent of GDP in FY2017/18 to 7.8 percent in FY2018/19 and 6.4 percent in FY2019/20, Fitch Solutions said.

Egypt's fiscal consolidation and robust economic growth will help narrow the country's public debt as a share of GDP. We forecast total public debt to fall from an estimated 89.4 percent of GDP in FY2017/18 to 84.3 percent in FY2018/19 and 78.6 percent of GDP in FY2019/20, it added.

Our Oil and Gas team forecast gas output to increase by 20.0 percent in 2019 and 5.6 percent in 2020, the report read. "Rising gas productio will further grow the government's tax intake."