25 September 2018 03:23 PM

WB forcasts Egypt’s budget deficit to decline to 8.8% by end of 2017

Thursday، 12 October 2017 - 01:31 PM

The World Bank's report titled "MENA Economic Monitor, October 2017" predicted that Egypt's budget deficit to reach 8.8 percent of the GDP in FY 2017/2018, compared to 10.8 percent in FY 2016/2017.

Egypt’s economy growth is predicted to record 4.5 percent in FY 2017/2018, according to the report.

Egypt’s economy is projected to perform better with the liberalization in the exchange rate, increased exports and tourism; growth is expected to accelerate to 5.3 percent in 2019.

The liberalization of the exchange rate in November 2016 has eased shortages in foreign currency, eliminated the parallel market and kick-started an improvement in Egypt’s external accounts.

The Balance of Payments (BoP) achieved a US$13.7 billion surplus (5.8 percent of the year’s projected GDP); 90 percent of which was realized only following the November exchange rate floatation.

This compares to a BoP deficit of US$2.8 billion (-0.8 percent of GDP) a year earlier, with the large improvement in FY2016/17 resulting from a narrowing current account deficit (albeit in absolute terms only), and a surge in capital and financial inflows.

The current account deficit fell to US$15.6 billion in FY2016/17 from US$19.8 billion a year earlier, due to higher oil and non-oil exports, contained imports, an uptick in tourism and remittances.

The capital and financial account jumped to US$29 billion in FY2016/17, from US$21.2 billion due to increased external borrowing as well as the rise in net FDI (reaching 3.3 percent of projected GDP, from 2.1 percent a year earlier) as well as a surge in portfolio inflows that were encouraged by Egypt’s improved outlook and attractive returns on EGP-denominated assets. 

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