The Egyptian government targets a budget deficit of 7.2% and a GDP growth of 6.1% in fiscal year (FY) 2019/20, the Minister of Finance, Mohamed Moeit, said on Tuesday during an industry conference.
During the conference organised by the Egyptian Center for Economic Studies, Moeit added that as the FY nears its end (June), there will be no need for parliament to amend the country’s budget.
He pointed out that the general budget faced challenges last year due to the global financial market volatility, the deterioration of emerging markets (EMs), the rise of US interest rate, and oil prices.
“Despite all these challenges putting the economy under major pressure, the economic reforms enabled us to overcome them, and we finally saw a decline in the dollar price and interest rate in Egypt,” Moeit stressed.
The minister explained that the crisis in EMs has caused many economic problems, as interest rates on government borrowing rose to 20-21%, while the targeted average interest rate on the government debt instrument was estimated at 14%.
The dollar price estimate in the current budget is EGP 17.25 per dollar, while the price of the dollar rose to nearly EGP 18 during that period. The budget estimated the oil prices at $67 a barrel, while it rose to $87 a barrel globally during that period.
“Despite these changes, we managed to achieve an initial budget surplus of EGP 21bn during the first half of the current FY, while the estimated surplus as agreed with the International Monetary Fund was about $15bn, and the tax revenue during that period rose to EGP 304bn, and the target value was estimated at EGP 300bn, which confirms the ability of the budget to achieve the target deficit of 8.4% during FY 2018/19, and even achieve better results than the target,” Moeit said.
Furthermore, he added that the ministry is working on drafting e-commerce and its taxes law, noting that the ministry has met with Google and other companies for that regard, and emphasised its desire to issue the law this year.
Moeit noted that the ministry has requested the assistance of the Organization for Economic Cooperation and Development since there are no global standards to abide to.
On the other hand, Amr El Mounir, the former deputy finance minister, said that the volume of digital economy worldwide reached $27tn in 2017, up by about $2tn compared to the year before.
El Mounir stressed that the digital economy exceeds the volume of ads published on social media and represents a major part of the global economy.
He explained that the problem facing the state in terms of applying the tax on digital economy lies within the state’s right to impose taxes on non-residents.
Moreover, he said that Egypt has a great chance in this regard through the legislative reform on account confidentiality.
He added that the government targets increasing tax revenues from the GDP in 2021 to 17%. There is an equation to increase tax revenues without affecting investments through combating tax evasion.