The Ministry of Finance will take the needed regulative reforms to turn the General Pension and Social Security Authority (GPSSA) into an investment entity, the Minister of Finance Mohamed Moeit said on Tuesday evening during an event organised by the Canada-Egypt Business Council (CEBC).
The government’s financial situation is strong as the Ministry of Finance will repay EGP 1.3tn to pension funds affiliated to the Ministry of Social Solidarity over seven years, the minister highlighted, explaining that EGP 160bn of the total sum will be repaid in the fiscal year (FY) 2019/20 and more EGP 170bn in FY 2020/21.
“I agreed with the International Monetary Fund (IMF) to comprehensively develop the pension system to make it contribute to the economy as is the case in many countries,” Moeit stated.
He asserted his ministry’s commitment to implement the current taxation policy “without sudden changes” in line with the growing tax collection and attempts to integrate the informal sector in the economy.
“We would like to build trust with tax payers. No amendments to any of the taxation laws will be made without social dialogue,” he assured.
I agreed with the Micro, Small, and Medium Enterprises Development Agency (MSMEDA) to be the only governmental entity that is responsible for issuing licenses to MSMEs. The small businesspersons will only deal with MSMEDA, the minister stated.
He added that MSMEs will pay very low taxes without checking their financial budgets for three years to further encourage them to enter formal market.
Egypt has suffered from a very tough economic situation before implementing the reform programme that required the authorities to take decisive measures to control it, the minister mentioned.
“When I leave my position, I am sure that Egypt’s economic situation will be better than it was years ago before the programme. The reforms take eight years to be fully implemented and we are in the 6th year now,” Moeit added.
Egypt is expected to achieve more positive indicators over the next couple of years, the minister said, noting that the GDP growth will hike to 7% in FY 2021/22 compared to 6% in FY 2019/20.
Egypt’s GDP growth before the 2011 revolution was at the range of 5-6% which was good, but it was not inclusive and lacks the fair wealth distribution, the minister asserted, adding that after the revolution, the growth was very limited even in negative figures in some periods.
“The advantage of the current 6% GDP growth is that it reaches all areas of the country. There are many road networks that are being implemented and sanitation projects nationwide. All those investments create job opportunities for Egyptians,” the minister explained.
Economic factors that contribute to the current GDP growth positively changed as investment contributes by 2.5% of growth while consumption is decreased, the minister stated.
The government aims at supporting the GDP growth in line with controlling the public budget to decrease the deficit as well as debts, and increase budget revenues, the minister said, noting, “our engine in the next period is encouraging exports, GDP growth, and creating jobs.”
Unemployment figures are declining as well as the budget deficit, the minister shared, adding that his ministry aims to achieve EGP 124bn primary surplus to decrease borrowing needs.