Egypt's Growth Records 3.3%, Deficit Drops to 7.4% in FY2020/21: Maait

In the “Challenge and Achievement” report for the year 2021, on the performance of the Egyptian economy during the past seven years, the Minister of Finance Mohamed Maait confirmed that the rates of economic performance dazzled the international financial and rating agencies, as the results of the indicators exceeded expectations and targets.

The Director of the International Monetary Fund (IMF) said: “Egypt is a shining star in the field of economic reform,” explaining that had it not been for the coronavirus crisis, it would have achieved leaps in financial performance indicators, as it recorded since the global financial crisis the highest growth rate of 5.6% in the fiscal year 2018/19 compared to 4.4% during the year 2013/14.

Egypt achieved the second largest economic growth rate in the world by 3.6% during the FY2019/20, which witnessed the start of the “pandemic” with its negative repercussions, according to the IMF.

According to Bloomberg, it was among the ten fastest growing economies in the world during 2020, and ranked, according to The Economist, second in the world in the growth rate after China in the last quarter of the fiscal year 2018/19.

Moreover, Harvard International Development Corporation expected the Egyptian economy to grow Annually at an average of 6.8% until 2027, a reflection of the persification and development of Egypt’s production capabilities. In its latest reports, the World Bank raised its forecast for the growth rate from 3.3% for the fiscal year 2020/21 to 5% in the current fiscal year.

The minister explained that Egypt was able to record the second largest primary surplus in the world at 2% of GDP during the FY2018/19, compared to a primary deficit of 3.5% in FY2013/14, and it continued to achieve a primary surplus despite the pandemic at a rate of 3.5%, 1.8% during the FY2019/20, and 1.46% of the GDP in the last fiscal year.

He pointed out to the drop in the budget deficit from 12% in the fiscal year 2013/2014 to 7.4% during the fiscal year 2020/2021. The unemployment rate dropped from 13.3% during the FY2014/15 to its lowest level at 7.2% by the end of December 2020, and inflation rates declined from 22% in 2017 to 4.5% in March 2021.

The minister indicated that Egypt was one of the best countries in reducing the debt-to-GDP ratio by 20% within three years, despite the “pandemic”, as the debt rate decreased from 108% in 2016/2017 to 87.5% at the end of the 2019/2020 fiscal year. He explained that the average global indebtedness of emerging countries increased by about 17% and the major countries by about 20% during the pandemic.

While the debt ratio to Egypt’s GDP witnessed a slight increase despite the unprecedented expansionary development policies adopted by Egypt, where the debt rate reached about 91% by the end of the FY2020/21, a rate lower than the recorded for some European countries.

The government seeks to adopt a medium-term strategy in order to maintain the downward trend of debt service, which declined from 40% by the end of 2020 to 36% in June 2021, targeting 32% during the current fiscal year budget.

The government has succeeded in extending the duration of the debt from less than 1.3 years before June 2017 to 3.4 years in June 2021, and it is targeted to reach 3.8 years in the current fiscal year and up to 5 years in the coming years.