Egypt’s government spending on investments in various fields in the fiscal year 2020/21 is “unprecedented” with an increase of 35%, according to a statement by the ministry of finance.
A total of 280.8 billion Egyptian Pounds ($17.6bn) has been allocated to improve general services and raise standards of living, especially in the poorer areas, Finance Minister Mohamed Maait was quoted as saying in the statement published on the ministry’s website.
Some 225 billion pounds ($13.3bn) is financed by the treasury while the remaining amount of 55.8 billion ($3.3bn) is sourced from various funds, the statement said with no other details.
The increase will “strengthen the economy, raise development figures and offer new jobs especially as the global economy witnesses a slowdown due to the spread of Covid-19,” the statement said.
Last week, Minister Maait said that early indications of the fiscal year 2019/20 show a GDP surplus of 1.8%, less than the targeted 2% due to the effects of the virus.
In April, the World Bank said that Egypt’s growth in Fiscal Year 2018-2019 increased to 5.6% (up from 5.3% the previous year), a rate that was sustained through the first quarter of Fiscal Year 2019-2020, according to the bank’s latest Macro Poverty Outlook.
The growth was driven by a “macroeconomic stabilisation program that was largely successful, generating a solid primary budget surplus, reducing the debt-to-GDP ratio, and replenishing reserves. Additionally, the wholesale, retail trade, agriculture, and manufacturing sectors contributed to the increase in growth,” the report said.
The report pointed out however that vulnerabilities persist such as underperformance in exports and foreign direct investment, which may be aggravated by the disruptive repercussions of the Covid-19 pandemic.
The recovery should focus on addressing business environment constraints while “enhancing revenue-mobilisation to create the fiscal space needed to invest more in people,” the report added.