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Egypt budget deficit narrow to 5.6% of GDP in 2022

Reuters / Amr Abdallah Dalsh
A general view of community houses and minarets in the old quarter of Cairo.

Egypt expects more progress on reducing its budget deficit this year and a foresees a decline in its debt ratio after currency devaluations caused it to rise last year, Finance Minister Mohamed Maait told a news conference on Monday.

The deficit was expected to narrow to 5.6 percent of gross domestic product (GDP) in the fiscal year that began on July 1, from 6.1 percent in 2021/22, he forecast. It would fall still further in 2023/24 to five percent.

The budget had a primary surplus of 1.3 percent last year, its fifth year of such surpluses, he added.

The debt-to-GDP ratio would fall to 82.5 percent this year from 87.4 percent last year and 84.6 percent in 2020/21. Maait had expected the ratio to fall last year, but devaluations in the first half of 2022 had added four percentage points to the total, he said.

The Egyptian pound weakened to 18.76 to the dollar as of June 30 from 15.66 pound on Jan. 19.

Egypt was continuing negotiations with the International Monetary Fund (IMF) begun in March, Maait said, adding that the fund had not asked Egypt to reduce subsidies on bread as had been reported in some media.

The IMF last month said Cairo still needed to make “decisive progress” on fiscal and structural reform.