UK Markets close in 7 hrs 32 mins

Egypt sees budget deficit narrowing to 5.6% of GDP this year

·1-min read
FILE PHOTO: A view of the city skyline and River Nile from Cairo tower building in the capital of Cairo

CAIRO (Reuters) -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% of gross domestic product (GDP) in the fiscal year that began on July 1, from 6.1% in 2021/22, he forecast. It would fall still further in 2023/24 to 5%.

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

The debt-to-GDP ratio would fall to 82.5% this year from 87.4% last year and 84.6% 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 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.

(Reporting by Moataz Mohamed and Mahmoud Salama; Writing by Lina Najem and Patrick Werr; Editing by Alex Richardson)