Egypt Responds to Standard & Poor’s Updated Economic Forecast
Egyptian Finance Minister Mohamed Maait confirmed that his country will take a package of financial, monetary and structural measures to address the problems that prompted Standard & Poor’s to adjust its outlook for the Egyptian economy to negative.
The minister said that Standard & Poor’s decision to maintain Egypt’s credit rating in both local and foreign currencies at ‘B’, adjusting the outlook for the future of the Egyptian economy from stable to negative as a result of pressures from foreign operations, comes in light of exposure of the Egyptian economy to complex external pressures.
He added that the most important of them are related to the consequences of the armed conflict in Europe and the subsequent negative economic consequences in the world, including an unprecedented wave of inflation, noting that the Egyptian government provides financial support to the groups most affected by the current inflationary pressures.
Maite stressed that Egypt is continuing its economic reform program supported by the International Monetary Fund, explaining that the government will adopt a package of financial, monetary and structural measures to address the Egyptian economy’s high external financing needs. prompting Standard & Poor’s to change its estimate, which it estimates is around $17 billion in the current fiscal year and $20 billion in the next fiscal year 2023/2024.
The minister added that the Egyptian government is committed to implementing what it announced in December 2022 on structural reforms, especially the offer program, and to attract more foreign direct investment while pursuing a policy of financial control. Which leads, according to the report, to a continuous inflow of foreign exchange,
He noted that “Standard & Poor’s” expects an average annual economic growth rate of 4% over the next three years, driven by the construction and energy sectors, as well as other sectors such as information and communication technology, wholesale and retail trade, manufacturing, agriculture and healthcare.
The Minister said that Standard & Poor’s highlighted the continued achievement of fiscal discipline, which was largely evident in the previous fiscal year 2021/2022, when the overall deficit reached 6.1% of GDP compared to 6.8% of GDP in the previous year 2020/ FY 2021 in light of the coronavirus pandemic and achieving a primary surplus for the fifth year in a row at 1.3% of GDP.
He noted that the report highlights the significant growth in government revenues through the expansion of the tax base, despite economic conditions, as a result of wide-ranging mechanization measures that are being applied to improve tax administration, in addition to efforts to rationalize spending and expand the social safety net.
The minister explained that the report indicated that the current account deficit was expected to narrow in nominal terms over the coming period until 2026, as the flexibility of the exchange rate regime would support Egyptian exports amid strong oil export revenues, especially natural gas. , which recently reached $700 million per month.
There is a significant improvement in the current balance figures for the 2021/2022 financial year, as non-commodity export revenue achieved a significant growth of 29% annually in the light of an increase in the export of fertilizers, medicines and ready-made clothing. A large surplus was also achieved on the side of the trade balance of oil 4.4 .% billion in light of expanding natural gas exports, and the Suez Canal has achieved a historically high revenue of $7 billion and is expected to reach over $8 billion in 2023, in addition to growing tourism revenue.
The minister pointed out that last year, workers’ remittances continued to generate high revenues, which amounted to about $33 billion, while foreign direct investment receipts increased by 71%, reaching about $9.1 billion, compared to about $5.2 billion. billion dollars in the previous year, in addition to diversifying sources of investment. Foreign flows into many industries, the most important of which are: manufacturing, construction, communications and information technology.
For his part, Deputy Minister of Financial Policy and Institutional Development Ahmed Kazhuk said that Standard & Poor’s notes the importance of the role of the private sector in economic activity and the increase in the contribution of the private sector to total investment. The government continues efforts to improve the business environment to attract more investment from foreign citizens through the application of the state property document.
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