Egypt’s main priority is to reduce inflation to within the central bank’s target, Finance Minister Mohamed Maait said. He added that economic growth is expected to rise in the financial year starting in July to 4.2 percent, up from 2.8 percent this year.
Maait also stated that the government aims to sell more state assets, which would reduce the state’s role in the economy. This would allow the private sector more ownership, increase productivity, and generate revenue to reduce Egypt’s debt.
Read more: Egypt’s budget surplus soars to $8.74 billion in first nine months of FY 2023/2024
Egypt’s economy has been impacted by the crisis in Gaza over the last half-year, which has slowed tourism growth and cut into Suez Canal revenue – two of the country’s biggest sources of foreign currency. Maait revealed that revenue from the waterway has fallen by more than 60 percent.
These challenges prompted the IMF to expand financial support to Egypt to $8 billion. In response, Egypt sharply devalued its currency, made its latest pledge to move to a flexible exchange rate, and struck a record $35 billion investment deal with a UAE sovereign wealth fund.
Inflation has dipped from a record 38.0 percent in September to 33.3 percent in March, but it remains far higher than the central bank’s target range of 5 percent to 9 percent.
Financing giant state projects
Over the last decade, Egypt has generated growth by financing giant state projects, including a new $58 billion capital in the desert, through increased foreign borrowing that quadrupled its foreign debt. The government now hopes to lower interest rates to reduce interest payments on this debt.
To achieve this, the government has put a limit of EGP1 trillion ($20.6 billion) on all public investment, including that of the military. Maait stated that the private sector should make up at least 65-70 percent of the economy, as it is better equipped to create the 900,000 jobs needed annually for the young labor force.
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