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Egypt Targets 6.4% Growth, 6.2% Deficit in Coming FY

Egypt Targets 6.4% Growth, 6.2% Deficit in Coming FY

Tuesday, 12 November, 2019 - 11:15
People buy vegetables at a popular market in Giza, Egypt October 2, 2019. (Reuters)
Cairo - Asharq Al-Awsat
Egypt’s Finance Minister Mohamed Maait said Monday that the government is targeting positive results for the coming fiscal year regarding financial indices, with a growth rate of 6.4 percent and a decreased overall budget deficit to 6.2 percent.

Maait stated that the budget's preliminary statement for the fiscal year 2020/21 also aims to decrease the local debt-to-GDP ratio to 80 percent.

The minister clarified that the FY 2020/21 budget focuses on applying large scale, profound structural reforms to push the private sector to be the engine of economic development.

The government is targeting 6 percent growth in GDP this fiscal year, a deficit of 7.2 percent and a debt-to-GDP ratio of 82 percent.

Egypt is drawing to a close a three-year economic reform program tied to a USD12 billion loan from the International Monetary Fund, which has been disbursed in full.

That program included sharply devaluing the currency, slashing fuel subsidies and introducing a value-added tax. The tough measures have strained living conditions for millions of Egyptians, about a third of whom live below the government-set poverty line of EGP8,827 (USD548.6) per month.

The new budget is aimed at “...raising the efficiency of government performance, improving the standard of living of citizens, and improving the services provided to them”, in line with Egypt’s Vision 2030, the ministry said.

In a related matter, the Central Bank of Egypt (CBE) said that Egypt’s annual core inflation rate rose to 2.7 percent in October 2019, from 2.6 percent in September 2019, according to a report.

The Central Agency for Public Mobilization and Statistics (CAPMAS) announced earlier that Egypt’s annual consumer price inflation declined to 3.1 percent in October 2019, compared to 4.8 percent in September 2019.

In the global context of monetary easing, the Federal Open Market Committee lowered its benchmark funds rate by 25 basis points by the end of October to a range of 1.5 percent to 1.75 percent and Turkey has also cut its key rates by 250bps last month. That said, we expect the CBE to cut rates by 50 bps in its upcoming meeting, Economist and banking analyst at HC, Monette Doss said.

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