The Egyptian economy is resilient and capable of meeting its external financial needs, despite the challenges posed by geopolitical tensions and rising interest rates, according to Finance Minister Mohamed Maait. He made the statement on Saturday in response to Fitch’s decision to downgrade Egypt’s credit rating from ‘B’ to ‘-B’ with a stable outlook.
Maait said Egypt had secured sources of external financing until the end of the current fiscal year, estimated at $4 billion, by diversifying its international markets. He cited the successful issuance of Samurai Bonds in Japan and Sustainability Bonds in China, worth $500 million each, as examples of Egypt’s access to favorable terms from multilateral banks of development. He also said Egypt had repaid $52 billion of its external obligations over the past two years, despite global economic difficulties.
The minister highlighted the good performance of public finances, which achieved a primary surplus of 1.6% of GDP in 2022/2023, compared to 1.3% in 2021/2022, and reduced the total budget deficit to 6% of GDP. GDP, compared to 6.1% the previous year. He added that the government was implementing structural reforms to strengthen economic growth, empower the private sector, create more jobs and improve living standards and services to citizens.
Maait also highlighted the positive indicators of the Egyptian economy, such as foreign direct investment flows, which reached $10 billion in the last financial year and are expected to reach $12 billion this year, channel revenues of Suez, which amounted to $10 billion in the last financial year and is expected to reach $12 billion this year, as well as the capacity to overcome the regional crisis. He said these factors reflect the confidence of international institutions in the economic path adopted by the Egyptian government, which aims to confront successive global crises through more effective financial policies.
The Egyptian government is committed to improving public debt-to-GDP indicators by increasing state revenue, improving spending efficiency and monitoring financial performance, Maait said. He said the government had successfully developed tax administration using technology solutions and digital systems, which resulted in an increase in tax revenue of 27.2% in the last financial year and 34% in the first quarter. of this year.
Maait also stressed that the government prioritizes social protection and structural reforms to address internal and external challenges affecting the Egyptian economy. He said budgetary allocations for social protection and support in the current financial year stood at 530 billion pounds, with an annual growth rate of 20%.
Ahmed Kouchouk, Deputy Minister of Financial Policies and Institutional Development, said the government was pursuing economic and structural reforms to address global crises, as noted in the Fitch report. He said the government was creating a business-friendly environment for private sector investment in development projects, based on advanced infrastructure.
He also mentioned that the government managed to abandon several economic activities worth $2.5 billion under the tender program during the first quarter of the current fiscal year, which contributed to increase foreign currency inflows to cover the needs of the Egyptian economy. Fitch’s report highlighted the increased risks of external financing for Egypt, due to rising financing costs and interest rates, the depreciation of the pound sterling against the dollar, the repayment schedule of external debt and the increase in public debt indicators.
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