Adviser of the Prime Minister for Economic Affairs Jehan Saleh refuted information which was published in Foreign Policy’s article on June 7 which included false and incorrect statements about the economic situation in Egypt.
“The article is severely blinded by personal political views that have washed over the author and have in turn attempted to both hide and distort facts and numbers published by international entities,” Saleh said.
She clarified to what extent the Egyptian economy had achieved progress at all levels by the recognition of regional and international financial institutions.
Egypt’s economic reform program, launched in 2016, was a much-needed brave endeavor and developed by the home-grown economic team, approved by political leadership, and endorsed by internationally acclaimed institutes like the International Monetary Fund (IMF).
The program aimed at recording a significant turnaround of the country’s main economic KPI’s with the ultimate objective of elevating the Egyptian quality of life-based on solid and permanent foundations.
Starting in 2018, the program’s objectives started to materialize with clear economic improvement as an initial and fundamental step toward the ultimate objective of the program.
This improvement gained the endorsement of multiple economic and financial institutes and clearly shed a positive view over the economy’s ratings as well as sequential positive reviews by the IMF and many other local, regional, and international economic institutes.
Unfortunately, positive tides always bump against rocks, but only to become stronger.
Accordingly, and to ensure objectivity in judging the economic performance versus 2013, below is a simple 8-point comparison between Egypt’s economic position in 2012/2013 and the current economic standing as of 2018/2019.
1- Egypt’s economy grew by 2.1% during 2011-2013, a rate that fell short of population growth rate driving average citizen share in the growth pie to decrease.
In 2018/2019, the growth rate reached 5.6% according to the Ministry of Planning latest published figures, as well as IMF, updated estimates, with average citizen share of the growth pie growing by 2.2%.
This makes Egypt one of the strongest and highest growth performer in the region and across emerging countries.
Such solid growth performance was cited by all rating agencies like Moody’s and Standard & Poor’s as well as international institutions such as the World Bank, African Development Bank, and the IMF.
2- According to Egypt official statistical body (CAPMAS), the unemployment rate averaged 12.7% in 2011-2013 before following a steady declining path over the past four years to reach a low of 8.1% in March 2019.
Creating more jobs for the Egyptian youth and people stands as the most important benchmark of whether the current growth story is benefiting wider segments of the population or not. Thus, not only growth is picking up in Egypt, but it is enabling more people to find jobs.
3- Egypt public finance is certainly in a much better and healthier position today than it was in 2013.
According to the Ministry of Finance’s latest estimates as well as the IMF, Egypt overall deficit (government expenditures fewer revenues) would decline to 8.4% of GDP in 2018/19 compared to 13% of GDP in 2012/2013.
In simple worlds, government expenditures bill would be higher than government collected revenues by 8.4% of Egypt’s national income (more often used name is GDP) after such bill peaked at 13% of Egypt income in 2012/2013.
4- More importantly, the Ministry of Finance is one month ahead from officially announcing the realization of a primary surplus this year (2018/2019) for the first time in 15 years.
Primary surplus means that the current government revenues would exceed its spending without interest payments.
This important indicator shows that the current government adopted policies throughout the year without considering interest payment bill since it reflects stock of government debt that was accumulated over the years due to successive policies of previous governments.
To reiterate, Egypt is on track to realize primary surplus worth 2% of GDP versus a primary deficit worth 5 percent of GDP in 2012/2013.
This means that the current government adopted policies to realize surpluses after years of running deficits that peaked in 2012/2013 (when the author party was in charge).
5- The government was able to realize such surpluses even though it tripled spending on investments over past four years to upgrade infrastructure base and improve basic services for the entire population including availability and reliability of electricity supplies along with improving quality of existing electricity stations and grids.
It also spent billions to expand in building roads network and to improve the connectivity among the governorates nationwide.
The government financed one of the biggest global campaigns that screened 100 million people for virus C and other critical diseases and at the same time provided immediate free treatment for all patients.
At the same time, the government further funded one of the biggest social housing programs globally with almost 700,000 units being delivered in four years.
6- It is also worth mentioning that the government realized primary surplus despite spending more on social programs and on social safety nets.
To mention a few items, the budget allocations to food subsidies increased to EGP 87 billion in 2018/19 up from EGP 35 billion in 2013/2014.
Annual budget allocations to treat citizens on behalf of the government including covering their health insurance bill increased to EGP 9 billion in 2018/19 after it was just over EGP 1 billion back in 2013/2014.
Budget allocation to finance cash transfers programs (Takaful and Karama) reached EGP 17.5 billion in 2018/19 versus less than EGP 5 billion in 2013/14.
7- On the debit side, one must pinpoint that Egypt’s total government debt (domestic and external) would reach 91% of GDP this June after peaking at 107% in June 2017 (after the devaluation) and after reaching 90% in June 2014.
This means that the current government policies enabled Egypt to bring down its total debt (domestic and external) by 16% of GDP in just two years, making Egypt’s government one of the best performers in terms of its ability to bring down debt levels as a ratio to country national income know as GDP.
This does not mean that the current debt level is not still high and that is why the government has officially published its medium-term targets to further bring debt to GDP ratio down to 80% in June 2022.
8. According to the Central Bank of Egypt, Net International Reserves stands today at USD 44 billion (allowing Egypt to have a buffer that can finance Egypt imports bill for more than 8.5 months) versus USD 14.9 billion in June 2013.
This occurred as Egypt current account deficit (sum of Egypt trade balance of goods and services plus money transferred by Egyptian living abroad back home) declined from a peak of almost 5 percent of GDP in 2012/2013 to almost 2.5% of GDP in 2018/2019.
To conclude, Egypt economic performance and fundamentals have been significantly improving due to adopted reforms and policies, making the economy stands on stronger footing relative to where it was in 2013.
This economic turnaround story is one where all Egyptian contributed to and so all Egyptians should get credit for.