Egypt's budget deficit to GDP ratio declined to 3.6 percent in the first half of the current FY2020/2021 (July-December 2020), down from 4.1 percent in the same period of FY2019/2020, achieving a budget initial surplus of EGP 14 billion, according to Minister of Finance Mohamed Maait. This came within the financial indices of Egypt's budget during the first half of the current FY2020/21 announced on Thursday. Maait added that the annual growth of the state's revenues increased by 16 percent in the first half of FY2020/21 to reach EGP 453 billion, up from EGP 391 billion in the first half of FY2019/20. This increase surpassed the budget total spending annual growth that recorded 9.9 percent to reach EGP 681.2 billion, up from EGP 621.6 billion in the first half of FY2019/20, according to Maait. Maait attributed the increase in spending to the rise in public investment allocations to push economic activity forward amid the heavy pressure imposed by the COVID-19 pandemic and the expansion in supporting healthcare initiatives. Moreover, tax revenues rose by 10 percent in the first half of FY2020/21 to reach EGP 334 billion, up from EGP 304 billion in the first half of FY2019/20, driven by the increase in tax revenues collected from non-sovereign bodies by 12.4 percent compared to FY2019/20, according to Maait. He also added that taxes on a number of companies operating in the oil sector worth EGP 16 billion have been settled. Meanwhile, annual headline inflation went down to 5.4 percent in December 2020 driven by the decrease in prices of basic foodstuffs in the domestic market, according to Maait. He expounded that this decline had encouraged the monetary policy, set by the Central Bank of Egypt, to cut interest rates on governmental borrowing instruments with an interest rate average of 12.7 percent on the short-term T-bills, and from 13.6 percent up to 14.2 percent on long-term public bonds in December 2020. “Such a decrease contributes to mitigating the burden of debt services and leaves extra financial room for the public budget, allowing it to direct further allocation for the sake of pushing the economic activity and expanding in financing human and social development programmes, improving infrastructure and the basic services introduced to citizens,” Maait expounded. In this regard, Maait illustrated that the debt services bill receded by 8 percent to record EGP 246 billion in the first half of FY2020/21, down from EGP 267 billion in FY2019/20. He added that the finance ministry expanded long-term governmental bonds issuance to account for 85 percent of the public issuances by the end of the first half of FY2020/21, compared to the targeted 60 percent, outlined by the objectives of the economic reform programme backed by the International Monetary Fund. During the first half of FY2020/21, public investment expenses rose significantly as well by 59 percent to reach EGP 102 billion, up from EGP 64 billion in FY2019/20. In addition, an extra investment finance worth EGP 28 billion was allocated for the ministries of electricity, transport, and communication to address the negative impacts of the pandemic and to provide the necessary liquidity, said Maait. Public investments' value also witnessed an increase by 103 percent during the first half of FY2020/21, according to Maait. Maait also noted that education sector allocations witnessed an increase by 7.4 percent and social protection allocations went up by 35.8 percent, while commodities and services purchasing expenses saw a decrease by 7.6 percent compared to FY2019/20, driven by the rationalisation of public spending procedures that aims to provide more funds for public investments, economic activity, and social protection, without affecting the government's economic and fiscal objectives. In this regard, Maait clarified that FY2020/21 shouldered unbudgeted allocations worth about EGP 14.5 billion for a number of public bodies to address the harsh impacts of the pandemic. The minister pointed out that these positive indices were attained despite the ongoing crisis and its related severe repercussions, adding that they mirror the stability of the country's financial stability.
