The World Bank has signed Egypt’s return to the growth path it was before the Corona pandemic, and that it will move forward with reforms aimed at containing the budget deficit ratio and the government debt-to-GDP ratio, within the framework of the basic scenario that assumes the gradual improvement of the pandemic situation.
However, the outlook remains unclear due to global challenges related to virus mutants and vaccination distribution, the bank added.
In the Egyptian Economic Monitor report, which was revealed today, the World Bank continued that, similar to global expectations, Egypt’s economic prospects in the short and medium terms depend to a large extent on containing the pandemic.
The basic scenario assumes that the pace of the vaccination process will accelerate at home and abroad, and that the re-imposition of the closure will be temporary, as the strict measures aimed at combating the Corona virus in general will be reduced, according to the bank.
He said that under this scenario, the growth rate in Egypt will return to its pre-pandemic track, reaching 5.5 percent in the current fiscal year 2021/2022.
Although exports of goods and services are expected to continue to recover, external financing needs are likely to remain high during the fiscal years 2021/2022 and 2022/23, as imports will also increase in conjunction with the resumption of growth in addition to the recent appreciation of the real exchange rate.
Moreover, global financial conditions may tighten and in turn lead to an increase in the cost of external financing.
On the financial side, the debt-to-GDP ratio is expected to resume its downward trajectory during the forecast period especially as revenue mobilization gradually improves, in light of the recently approved medium-term revenue strategy.
The Minister of Planning and Economic Development, Dr. Hala Al-Saeed, had expected in late November that Egypt’s annual growth rate would continue to rise to range from 5.5 to 5.7% by the end of the current fiscal year, driven by the boom in growth rates in the first quarter, noting that various economic activities succeeded in achieving rates Positive growth during the first quarter of the same year.
According to previous statements by the minister last September, the annual growth rates of GDP were affected by the repercussions of the “Corona” pandemic, as the economic growth rate declined during the fiscal year 2019/2020 to 3.6%, compared to about 5.6% growth achieved during the previous fiscal year, adding – At the time – the initial results indicated achieving a growth rate in the range of 3.3% during the fiscal year 2021/2020.
The report said that foreign exchange reserves are still abundant, but the widening of the current account deficit has led to an increase in foreign debt service obligations.
He added, “Foreign exchange reserves are less than their peak before the outbreak of the pandemic at 45.5 billion dollars, but they remained at relatively abundant levels of 40.8 billion dollars at the end of October 2021, “covering 7 months of imports of goods”, despite the continuing impact of the Corona pandemic on the main generating activities. for foreign income.
And he continued: The reserves continued to be supported through remittances, the flow of portfolio investments in government securities (attracted by the large difference in interest rates), the issuance of sovereign bonds, and external financing.