CAIRO: Egypt’s high fiscal deficits and government debt levels will gradually reduce, global credit rating agency Moody’s Investors anticipated in a recent report, affirming that growth has started to pick up.
Egypt’s gross domestic debt surged to 2.116 trillion EGP ($263.5 billion) in fiscal year 2014/2015, that ended June 30, and the country’s budget deficit amounted to 11.5 percent of gross domestic product (GDP) in the same period, compared to 12.2 percent a year earlier.
The government share of net domestic debt amounted to 1.871 trillion EGP at June-end. The figure marks an approximately 333 billion EGP increase from 1.538 trillion EGP in FY 2013/2014.
“Economic and fiscal reform momentum supports Egypt’s B3 rating and stable outlook. Although still below pre-revolution levels, growth has started to pick up, and investor sentiment has improved,” Moody’s stated.
Cairo has adopted a five-year macroeconomic plan aimed to reduce the budget gap to between 8- 8.5 percent by 2018/2019, by applying subsidy reforms and introducing new taxes.
President Abdel Fatah al-Sisi ratified earlier in July the state budget for FY 2015/2016, after being revised to slash the projected deficit to 8.9 percent of GDP.
“The domestic market provides a sizable funding base for the government, while the successful issuance of an international bond in June signals global market access,” according to the report.