Egypt posts GDP up to 3.5% in FY2017/18: FinMin

Egyptian Minister of Finance Mohamed Maait said Egypt achieved an increase in gross domestic product (GDP) to 5.3 percent in financial year 2017/2018 from an average of 2.3 percent between 2011 and 2014.

The minister added that Egypt targets a growth rate of 5.8 percent within the current financial year 2018/2019.

This came during the minister’s speech at Beltone Access event series to shed light on recent macro developments within Egypt’s economic reform programme.

Maait added that Egypt needs to continue achieving higher economic growth rates of 7-8 percent given the growing population, which requires increased investment spending.

“Financial consolidation efforts have been intact, resulting in a primary budget surplus of 2 percent of GDP in financial year 2017/2018 for the first time in 18 years,” he stated.

Overall fiscal deficit was also reduced from a peak of 16.7 percent of GDP in financial year 2013/2014 to 9.8 percent of GDP in financial year 2017/2018, with an expectation to reach 8.4 percent this financial year,  Maait noted.

During the first quarter of financial year 2018/2019, the minister said the overall budget deficit fell to 1.9 percent of GDP from an average of 2.3 percent for the same quarter over the past three years, adding that this provided enough funds for increasing spending on social measures, including food subsidies and cash transfers, as well as government investment spending to support growth targets.

The minister of finance also pointed out the debt management strategy to reduce debt-to-GDP ratio as well as debt service cost, whereby total government debt was reduced from 108 percent of GDP in financial year 2016/2017 to 98 percent in financial year 2018/2019.

Tax treatment on bills and bonds

“The minister of finance referred to the latest amendments to the tax treatment on the returns of bills and bonds, which were adapted to comply with the best international practices applied in most countries and to deal with some imbalances in the previous application; without imposing any new tax burden in relation to the tax rate or tax policy on investors in government securities,” a statement of Beltone revealed.

The current tax rate on the proceeds of government securities is set at 20 percent, while the tax on commercial and industrial profits is set at 22.5 percent, according to the statement.

“The move ensures tax equality with regards to financial institutions investment in government securities and also the fair collection of taxes due on profits earned from the rest of their activities,” the minister added.

Source: Egypt Today