Amr El-Garhy, the Minister of Finance, said that the Egyptian economy will not be able to survive with the current high deficit and debt rates, stressing that the new fiscal year’s budget aims to reduce debt and deficit to help treat the structural imbalances suffered by the Egyptian economy.
El-Garhy said that the government is adopting an economic reform programme that aims to increase growth rates to generate jobs that create increases in the incomes of several Egyptian segments and that increase allocations of expenditure on social security programmes and basic services.
The minister stressed that the current phase requires continuing to take sound and serious reform measures to reduce the budget deficit rates while guaranteeing protection and security for the segments worth the protection from the temporary negative impacts of the economic reforms.
El-Garhy pointed out that the new budget draft for fiscal year (FY) 2017/2018 aims to achieve an economic growth rate of no less than 4.6%, which can increase to 6%, on the condition that the growth impacts are reflected on the different segments of society and the deficit is reduced to 9% compared to 12% by the end of this fiscal year.
The government aims to reduce unemployment to levels ranging from 11% to 12% during FY 2017/2018. Making this happen requires generating 750,000 jobs to reduce unemployment from 12.4% during the last quarter of 2016 to 11.5% in 2017/2018.
The government of Prime Minister Sherif Ismail is working to implement an economic reform programme that includes imposing the value-added tax (VAT), liberalisation of the exchange rate, reducing the electricity and petroleum product subsidies, and reducing the imports of non-essential goods.
Mohamed Abo Basha, from Hermes Group, said that the initial figures of next fiscal year’s budget is realistic to some extent.
The data from the Central Bank of Egypt (CBE) revealed that total foreign debt increased to $67bn by the end of December 2016 instead of $46bn in the corresponding quarter from 2015/2016. Local debt recorded nearly $3.05tn by the end of December 2016.