The minister added that the coming FY2022/23 is expected to attain a primary surplus at a value of EGP 132 billion (1.5 percent of the GDP) with adequate contingency put in place to mitigate against the impacts of the ongoing Russian-Ukrainian War.

He also said that Egypt’s real GDP growth is expected to stabilise at 5.5 percent in the coming FY as a response to the ongoing global challenges; particularly the war in Ukraine and the rising global inflation.

In terms of inflation, Maait noted that Egypt’s inflation entered the double digits zone as of March 2022, when the Russian-Ukrainian conflict broke out, and has been accelerating since then.

Concerning debt levels, the minister explained that debt was affected over the past two years with the COVID-19 pandemic, the impacts of the war in Ukraine, and the rising inflation, with all these challenges pushing the government towards increasing investments and securing more loans to meet its rising financial needs.

In this respect, Maait indicated that Egypt’s debt to GDP ratio is projected to rise to 86 percent by the end of June 2022, up from the 84.6 percent recorded in June 2021, adding that the government is adopting a plan that aims to lower this rate to 75 percent by 2027.

Growth in revenues

Speaking about the budget’s revenues, Maait revealed that tax revenues accounted for 75 percent of Egypt’s overall revenues.

In this respect, Maait said that total revenues are expected to grow by 16.2 percent in FY2022/23 to post EGP 1.5 trillion, up from FY2021/22’s EGP 1.3 trillion.

He added that tax revenues are projected to grow by 23.4 percent in FY2022/23 compared to FY2021/22 to reach over EGP 1.1 trillion, up from about EGP 987 billion, thanks to the automation and digitisation projects implemented in the tax system.

In terms of the Suez Canal’s revenues, the minister said that they are anticipated to hit $7 billion by the end of FY2021/22, up from the $3.3 billion recorded in the previous FY.

Budget deficit increases

The minister also said that the overall deficit of FY2022/23’s budget is also expected to expand by 13 percent to record EGP 558.1 billion, up from the previous FY’s EGP 494 billion.

Furthermore, Maait addressed how the monetary policy has affected Egypt’s budget, as every rise in the key interest rates of the Central Bank of Egypt (CBE) costs the budget about EGP 30 billion.

Since the outbreak of the Ukrainian war, the CBE hiked the key interest rates by a total of 300 basis points (three percent) in response to the global and local inflationary wave as well as the tapering policy of the US Federal Reserve.

As a result, Egypt’s real interest rate dipped into the negative zone for the first time in years to 0.7 percent, down from about two percent, according to Maait.