Egypt eyes 2% initial surplus-to-GDP ratio, 6.3% budget deficit in FY2020/21: CBE

Egypt is aiming to achieve a 2 percent of initial surplus to GDP ratio in the current FY2020/2021 while attaining a 6.3 percent total budget deficit, according to the Central Bank of Egypt (CBE).

In its fiscal stability report for 2019, the CBE added that the government offered international bonds worth $5 million in May 2020 despite the decrease in investments in emerging markets in the first quarter of the year.

It also said that the fiscal stability index witnessed a notable improvement in 2019, before declining by the beginning of 2020 due to the COVID-19 pandemic.

Regarding the CBE’s initiative that was launched during 2020 to support the construction, agricultural and industrial private sector; the report revealed that the total allocation that was used in this respect recorded 68.8 billion Egyptian pounds through the end of June 2020.

Moreover, the total amount of loans and facilities portfolio under the initiative of supporting micro, small, and medium-sized enterprises (MSMEs) recorded 201.8 billion pounds from the end of December 2015 through the end of June 2020.

The report also showed that the banking sector represents 89.6 percent of the whole financial system by the end of FY2018/2019, which enjoyed good fiscal safety indices through June 2020 despite the challenges imposed by the COVID-19 pandemic.

In this regard, the report disclosed that the total assets of the banking sector reached 5.3 trillion pounds FY2018/2019 (5.8 percent growth rate compared to previous fiscal year), which continued to grow to reach 6.4 trillion pounds in June 2020.

On the other hand, domestic and hard currency liquidity in the domestic market had reached 44.4 percent and 67.7 percent respectively in FY2018/2019, which increased to 54.3 percent and 70.3 percent in June 2020, according to the report.

Egypt’s net foreign assets rose to 77.2 billion pounds in December 2019, driven by the increase in foreign cash inflows in 2019 that contributed in the significant increase that the net international reserves (NIR) witnessed in December 2019 at $45.5 billion, according to the report.

On the non-banking sector, the report said that the total assets of the sector reached 615 billion pounds in FY2018/2019, representing 10.4 percent of the total assets of the country’s fiscal system.