IMF sees Egypt’s government gross debt hitting 91.4% of GDP in 2021

The International Monetary Fund (IMF) projected on Wednesday Egypt’s government gross debt to reach 91.4 percent of its GDP in 2021, up from the 89.8 percent in 2020.

According to its Fiscal Monitor Report released on Wednesday, IMF expects this ratio to drop as of 2022 to 89.5 percent, then to 78.2 percent in 2025, and to 74.1 percent in 2026.

In addition, Egypt’s general government net debt is forecasted to jump to 83.5 percent of GDP in 2021, from the 79.2 percent recorded in 2020.

IMF expects the government’s net debt to GDP ratio to start its downturn in 2022 to hit 82.2 percent, then 78.8 percent in 2025, and 68.2 percent in 2026, the report read.

The IMF report also expects Egypt’s government’s general expenditure to rise slightly to 27.2 percent of GDP in 2021, from the 27.1 percent posted in 2020, which is below the pre-pandemic levels of 28.3 percent.

Government expenditures are projected to continue falling and are set to reach 26.7 percent in 2023 and 26 percent in 2026.

On the other hand, IMF said Egypt’s government revenues are expected to grow to 19.9 percent of GDP in 2021, from 19.2 percent in 2020, both of which remain below pre-pandemic levels, which ranged between 20 and 22 percent.

However, by 2022, revenues will reach 21 percent of GDP and then rise to 21.6 percent of GDP by 2025 and 2026.

According to the report, the government’s cyclically adjusted balance — which is an estimate of the fiscal balance that would apply under current policies if output were equal to potential — is projected to roll back by 7.6 percent of around GDP to 4.4 percent by 2026.

The government’s primary balance is also projected to remain unchanged from 2020, to stand at 1.3 percent of GDP in 2021, before rebounding in 2022 and 2023 to 1.7 percent and 2.1 percent respectively. Yet, the report expected this ratio to drop to 2 percent in 2024 and 1.7 percent in 2026

The Fund also forecasts Egypt’s gross financing needs to reach 36.9 percent of GDP in 2021.

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