Egypt’s Minister of Finance, Mohamed Moeit, announced on Tuesday, that the Egyptian economy witnessed improvements across various economic indicators, most important of which, is the EGP 21bn budget primary surplus achieved in the first half (H1) of the fiscal year (FY) 2018/19, representing only 0.4% of the GDP, down from an initial deficit of EGP 14bn in the same period last year.
He said during a press conference held today at the ministry of finance that such an improvement confirms that the Egyptian economy is steadily on the right path. The primary surplus also contributed to a significant improvement in curbing the total budget deficit rates to 3.6% of the GDP, compared to 4.2% of the GDP a year earlier, and an average deficit of 5.3% over the past three years.
According to Moeit, these improvements were the result of the surge in public revenues, which rose by 28.4% during the period from July to December 2018, which exceeded the growth rate of public expenditure which recorded 17.7%.
Tax revenues witnessed 27% growth year-over-year, as a result of the growth in some of the taxes, such as the real estate tax which grew by 102%; the self-employment tax with 47%; the income tax by 37%; the corporate income tax by 26.2%, and the value added tax by 21%.
Furthermore, he attributed the increase in public expenditure to the witnessed increase in government investment spending, maintenance allocations, purchases of goods and services, and the shift from commodity subsidies to cash subsidies.
In H1of FY 2018/19, government investments accounted for 64% of expenditures, a total of EGP 56bn, EGP 39.5bn of which were investments financed by the public treasury, marking a 41% increase, while the provisions for the purchase of goods and services increased by 62%, especially the financial allocations to the education field with 21%, and the health sector by 27%.
Moreover, Moeit stressed that these positive indicators will contribute to the continued reduction of debt to the GDP ratio, which has already declined from 108% in June 2017 to about 98% in June 2018, and the ministry targets to further reduce it to 93% of the GDP by the end of June.
“The Egyptian economy continues its strong performance trend, as the GDP growth rate continued to rise to record in the H1 of the current FY 5.5%, the highest growth rate achieved by the country since 2008, and the highest growth rate achieved by one of the countries of the Middle East and North Africa,” he explained.
Moreover, he added that the growth was backed by strong performance in investments and exports, which is reflected in the drop in unemployment rates to less than 10% in June 2018, the lowest since 2010.
The increase in Egypt’s net foreign reserves to record $42.9bn in December 2018, reflects the strength of the Egyptian economy, the minister stated. He elaborated that the approval of the executive board of the IMF) of the disbursement of $2bn to Egypt as the fifth tranche of its $12bn loan, as well as the statements of the Managing Director of the IMF, Christine Lagarde who said that since the start of Egypt’s ambitious economic reform programme in 2016, the country has made substantial progress as evident in the success achieved in macroeconomic stabilisation.