In dealing with COVID-19 crisis, the country’s economic achievements beat all world expectations

• Unprecedented economic development reforms are implemented to improve citizens’ standard of living.
• “Standard Chartered”: Egypt is among the top 10 economies in the world.
• IMF: growth rate is expected to grow by 5.5 % in next fiscal year
• Debt rate decreases to 88.1%, deficit reaches 6.6%, and foreign investment increases.
• Egypt’s GDP keeps increasing in 2025.
• “Moody’s”: Egypt’s credit rating is maintained at “B2” with a stable outlook.
• “Fitch”: Egyptian economy grows by 3% for current fiscal year (FY) and by 6% for upcoming fiscal year (FY)

 

Minister of Finance, Dr. Mohamed Maait, asserted that Egypt dealt with “COVID-19” crisis in a way that exceeded all world expectations, in terms of achieved performance and economic indicators. Accordingly, international funding and credit rating institutions maintained an optimistic and positive outlook on Egypt’s economic performance for the coming years, thanks to the unprecedented economic development reforms to improve living conditions and services offered to citizens. These reforms also helped the national economy to avoid the worst scenarios witnessed by some world economies amid COVID-19 crisis.

 

Due to strict implementation of the economic reform program, the state was able to pursue a flexible proactive policy against the pandemic-caused economic consequences, mitigate the shock, support the most-affected sectors and groups and preserve the workforce; whilst also boosting the national economy, the minister said. The government is studying and closely following up  implications of “COVID-19” crisis  the on domestic and global economic performance in order to prepare and implement the most appropriate financial procedures to face these challenges, besides ensuring the maintenance of the secure economic path achieved by the State and the gains of economic reform; in a way that helps to sustain improved economic indicators, indicated Dr. Maait. 

 

According to a statement issued by the Ministry of Finance, IMF issued a positive report on the Egyptian economy in 2020 expecting growth rate to reach 5.5 % in FY 2021/2022, and 5.8% in FY 2024/2025.  Debt to GDP ratio is forecast to decrease to 88.1% in FY 2021/2022, with a downward track reaching 77.7% by 2024/2025. Total deficit will decline to 6.6% during FY 2021/2022, and to 4.9% in 2024/2025. Additionally, the primary surplus is expected to rise to 2% on an annual base during FYs <<2022/2023-2024/2025>>; therefore, boosting significantly foreign direct investments in FYs <<2021/2022-2024/2025>>.

 

Furthermore, the statement also pointed out that the Economist Intelligence Unit (EIU) issued a report forecasting the Egyptian economic growth rate to surge anew by 2022, recording 5.7% in 2024. The current account deficit percent of GDP within the period from <<2021/2025>> will decline to record 1.5% as of 2025. The abovementioned figures are predicted to be achieved due to service sector export surplus expansion, as well as the increase of the Egyptian exports of gas and non-hydrocarbons’ proceeds as a result of the recovery of global demand levels during the period 2022/2025. According to Standard Chartered Bank estimates, Egypt is the only country in the Middle East which is expected to regain its global growth rates prevailing before the pandemic; thus, recording 5.5% of domestic growth during FY 2021/2022.  Egypt is also expected to be among the world’s top 10 economies by 2030. In terms of GDP rate, it will globally jump from twenty-first to seventh rank, as the report affirmed.

 

The statement also clarified that the Egyptian economy gained the confidence of experts and analysts of international rating institutions. The Egyptian economy will grow by 3 % during the current fiscal year, as expected in the latest report issued by Fitch despite its expectation that tourism traffic will continue declining and that commercial activity be limited as global trade continues to be affected. This confirms the diversity of the economic sectors and the tenacity of the Egyptian economy. Along with tourism revival in Egypt and recovering trade traffic levels, Fitch also expects that the Egyptian economy will achieve high growth rates in medium term, recording real growth rate by 6% in the FY 2021/2022. Inflation rates, as expected, will remain under control to reach an annual average of 5% during FY 2021. In addition, the banking sector lending balance for private sector activities will continue to increase by an annual growth rate of 20% in 2021.

 

Moody’s, a credit rating institution, affirmed Egypt’s at <<B2>> rating with a stable outlook for the Egyptian economy. This due to the Egyptian economy diversification, the improved performance of institutions’ management, high flexibility of the Egyptian banking sector, and robust funding structure. This positive rating reflects the confidence of Fitch’s experts and analysts in the efficiency and balance of economic and financial policies pursued by the government, especially with respect to recent economic and health crisis management. In addition, it proves the continuous economic and financial reforms implemented by the government and the successful implementation of structural reforms that aim to enhance growth rates, increase private sector partnership in national economy, strengthen governance system and economic performance follow-up systems, and ease of doing business, as added by the statement.