Finance Minister, Dr. Maait announced in a press conference held recently the following statements:
· A leap is witnessed in all the State financial indicators and we are committed to complete the reform program.
· 21 billion EGP worth of budget primary surplus is recorded in H1 2018/19
· Total budget deficit shrank to 3.6% over H1 2018/19 ,down from 4.2% in the same period in the prior FY.
· 28.4% increase is achieved in total public revenues, with a higher growth rate exceeding the public expenses rate of 17.7%.
· Proceeds of real estate tax surged by 102%, taxes on free profession by 47%, salary taxes by 37% and VAT by 21%.
· Allocations to educational sectors increased by 21%, health sector by 27%, and public investments by 64%.
· A promotional visit highlighting the performance of the Egyptian economy is carried out this month across the Gulf states, and shall head to South Korea next March.
· OECD's upgrade of Egypt's economy risk rates shall lure more European investments.
In a press conference held recently at the premises of the Ministry of Finance, Dr. Maait underlined the continuous improvement of the State's financial indicators, which is a token of the progress being achieved by the Egyptian economy and the success of the government's comprehensive socio-economic reform program.
The said program is completely supported by the political leadership and backed up by the true heroes behind its success, namely the Egyptian citizens, stressed Dr. Maait. The reform program also gained momentum from our key development partners such as IMF, WB, the African Development Bank, OECD, G7 countries and the European Union, the minister added.
Among the key positive financial indicators is the growth recorded in the primary surplus of the State general budget – before deduction of public debt interests- reaching 21 billion EGP in H1 FY 2018/19 to account for 0.4% of GDP, against a 14 billion EGP primary deficit (by 0.3% of GDP) over the same compared period the prior year.
Such significant leap in primary surplus helped in curbing total budget deficit to register 3.6% of GDP in H1 of current fiscal year, against 4.2% of GDP y-o-y and an average of 5.3% over the last three previous years.
General budget surplus is achieved thanks to the surge of public revenues by 28.4% in H2 FY 2018, exceeding the 17.7% increase in public expenses, and to the growth achieved in tax proceeds by 22.2%: real estate tax by 102%, free professions tax by 47%, salary tax by 37%, taxes on companies' profit by 26.2% and VAT by 21%, noted the minister.
The growth of public revenues is attributed to the continuous improvement of the public expenditure structure; through boosting investment expenditure, increasing allocations for maintenance, procurement of goods and services, and substituting commodity subsidy by a more oriented and effective monetary subsidy. Public investments witnessed unprecedented growth by 64% to worth 56 billion EGP, 39.5 billion EGP of which are State Treasury-financed investments by 41% increase. Appropriations for the procurement of goods and services, especially for education and health sectors, also upped by 62%. Indeed, this reflects the political leadership and the government's interest to meet the essential needs of citizens, to enhance human resources and to overhaul infrastructure across the nation, stressed Dr. Maait.
Financial allocations for the education sector grew to 21% over H1 of current FY due to the increase of public expenditure oriented towards procurement of goods and services, and public investments to reach 28% and 70%, respectively. Appropriations of health sector went up by 27% on the back of the surge in expenditure on goods & services and public investments by 75% and 47%, respectively. This reflects the government's keenness to upgrade both sectors and to enhance human resources as well.
Thanks to the aforementioned positive indicators for the general budget, debt of budget organs to GDP has decreased, to reach 98% in June 2018, down from 108% in June 2017. By next June 2019, such debt rate is aimed to be reduced to 93% to GDP. The minister reiterated that these positive economic results are a token of the resilience of the economy and its capability to overcome all the hardships the took place over the last 8 years. International follow-up reports on the Egyptian economy proved the success of the comprehensive reform program adopted by the country and helped in restoring confidence in its performance.
Over H1 FY 2018/19, economic growth recorded 5.5%, the highest rate ever since 2008, compared to 5.3% increase in FY 2017/18 and to an average of 2.3% over 2011 up to 2014. Unemployment rate also decreased to reach less than 10% in 2018, the lowest level ever since 2010.
Strong performance of the Egyptian economy can be also evidenced in the increase achieved in foreign reserves that edged up to USD 42.6 billion by the end of last December, and in the parallel recent decrease recorded in the monthly and annual basis of inflation rates, he added.
Ministry of Finance is committed to complete the comprehensive socio-economic reform program, stressed the minister. Most planned financial procedures have been approved in the general budget of FY 2018/19, namely: energy rationalization measures, amendments to development fee law, increase of production taxes on cigarettes and tobacco, increase in salaries and pensions, and revision of tax exemption limit to alleviate burdens on the vulnerable categories.
International financial and development institutions hailed the performance of the Egyptian economy and the success of the economic reform program. Accordingly, IMF approved the disbursement of the 5th USD 2 billion tranche of the loan facility provided by the Fund. Ms. Christine Lagarde, IMF executive director, together with WB President, lauded efforts of Egyptian authorities in their implementation of the reform programs that shall pave the way for achieving more sustainable and increasing growth rates.
Last year, international credit rating agencies upgraded Egypt's rank: S&P upgraded its rating from "–B" to "B", while Fitch and Moody's agencies improved Egypt's economic outlook from "stable" to "positive".
Moreover, in light of the increasing competitiveness and stability of the Egyptian economy, OECD upgraded Egypt's State risk rate from the 6 th to the 5th rank. Among the 201 states covered in the OECD's report, only 4 states, topped by Egypt, had their ranks been upgraded. OECD attributed such advancement of Egypt's rank to the success of the financial and economic reform measures and the improvement of investment environment that helped in luring more European investments to the Egyptian markets.
Commenting on the new measures adopted in the financial policy, Dr.Maait said that over Q2 FY 2018/19, the ministry introduced new financial instruments for investors in the local markets represented in the issuance of zero coupon bonds of 1.5 to 2 year terms, thus extending debt service dues to following years. Since October 2018 till last January, the ministry also paid visits to the prominent financial centers in some east Asian countries, and currently plans to visit Gulf States and Korea in February, China and Hong Kong by next March 2019. These visits aim to inform large Asian investors with the latest developments of the Egyptian economy in a bid to attract more investments to markets.