Prime Minister Moustafa Madbouly reviewed on Tuesday a number of important issues concerning the economy, society, and latest developments during a Cabinet weekly meeting. At the meeting, Minister of Finance Mohamed Maait presented a report on the financial performance between July and December 2019, as well as updated estimates for fiscal year (FY) 2019/2020.
Maait indicated that the Ministry of Finance was able to achieve a primary surplus of 2% of GDP in FY18/19 compared to deficit of 3.5% in FY 15/16; the realised surplus is the second highest primary among emerging markets. Adding to this, the ministry also aims to continue achieving a primary surplus of 2% in FY 19/20.
On the other side, the report indicated that Egypt was able to decrease the public debt from 108% of the GDP in June 2017 to about 90% of GDP in June 2019. This means that financial control reached 18% of the GDP in only two years. Egypt achieved the highest real GDP growth in the Middle East and North Africa, recording 5.6% of GDP.
The preliminary results of the financial performance for July-December 2019 according to the report show that a primary surplus of EGP 30.5bn recorded 0.5% of the GDP compared to 0.4% of the GDP during the same period last year, and against a primary deficit of EGP 14.1bn -0.3% of the GDP between July and December 2017.
The minister of finance said that the public treasury made an early payment between July and December, recording about EGP 33bn in favour of pension funds, which represent the full interest dues to funds for the whole year instead of paying them in June 2020. This treatment is a part of a settlement agreement between the state and pension funds for FY2019/2020.
The government announced in July 2019 the implementation of a comprehensive package for social measures for the current year with a budget of EGP 60bn. These measures include increasing the minimum wage, increasing pensions and the number of beneficiaries of Takaful and Karama programmes, and conducting the largest operation and administrative promotions to increase employee income. The report noted that government investments totaled EGP 64bn between July and December 2019, including EGP 56bn funded by the treasury with an annual increase of 41% over the previous year.
The minister of finance noted that the improvement of financial indicators and achievement of the primary surplus contributed to a continued decline of the government’s public debt to 78.3% in November 2019 from 83.8% in June 2019, and is expected to reach 83% in June 2020.
Moreover, the minister also indicated that the initial financial performance report monitored an improvement in the relation between the public treasury and the petroleum sector, achieving a surplus in favour of public treasury between July and September 2019 recording EGP 3bn for the first time in years.