Egypt's Finance Minister Forecasts Strong Economic Growth Amid Rising Debt

Egypt's foreign debt has surged to $168 billion, with a $3.5 billion increase in the fourth quarter of 2023, representing 42.4% of the nation's GDP. The majority of this debt, 81%, falls under the long-term category, reflecting Egypt's sustained reliance on external borrowing for state-driven projects. This trend aligns with a decade-long pattern of escalating external debt, culminating in an $8 billion economic support package from the IMF. Despite the mounting debt burden, Egypt's Finance Minister projects GDP growth of 2.8% for the fiscal year ending in June 2024, with a further acceleration to 4.2% in the subsequent year, mirroring the IMF's optimistic forecast.

Recent financial indicators have exceeded expectations, showcasing Egypt's economic resilience amidst global and regional crises. Non-tax revenues have surged by 122.9%, while tax revenues surpassed $20.6 billion, growing by 41.2% annually. These gains were achieved without imposing additional burdens on citizens or investors, thanks to enhanced mechanization efforts aimed at expanding the tax base and formalizing the informal economy.

The Ministry of Finance's proactive engagement with over 2,000 investment institutions annually underscores Egypt's commitment to economic growth. Through the Investor Relations Unit, the ministry provides foreign investors with real-time economic data, including debt levels, deficits, and incentives, fostering transparency and mitigating economic risks. Meanwhile, Egypt's urban consumer price inflation rate saw a decline to 33.1% in March, accompanied by a 10% month-on-month price increase, following the central bank's interest rate hike and transition to an inflation-targeting regime in early March.