Egypt’s gross debt-to-GDP ratio is anticipated to be the highest among emerging markets and middle-income economies, reaching 92.7% in fiscal year 2023, up from 88.5% in FY2022, according to the International Monetary Fund’s (IMF) Fiscal Monitor Report.
The IMF’s projections indicate a decrease in the gross debt ratio to 88.1% in FY 2024, with further reductions to 83.9% in FY 2025 and 81.5% in FY 2026.
The report also foresees a decline in Egypt’s revenues to 18.1% of GDP in FY 2023 and 2024, down from 18.9% in FY 2022. However, it expects a rebound in revenues for FY 2025 and 2026, rising to 18.3% and 18.8%, respectively. Additionally, expenditures are expected to decrease to 22.8% of GDP in FY 2023, marking the lowest level since 2014, before increasing again in FY 2024 and 2025 to 28.9% and 29.4%, respectively.
The report highlights that the government’s adjusted primary balance of GDP is projected to reach 2.3% in FY 2023, the highest since 2014, compared to 0.2% in FY 2022.
Furthermore, the overall balance, representing the difference between government revenues and spending, is expected to improve to -4.6% in 2023, compared to the -5.8% recorded in 2022.
Ruud de Mooij, Deputy Director of the Fiscal Affairs Department at the IMF, expressed concern about the high gross debt ratio to GDP, attributing it to elevated interest rates. He recommended that the Egyptian government take steps to reduce the debt ratio and rebuild confidence. These steps include boosting revenues, reducing tax exemptions, particularly those that could provide significant resources, and effectively managing them, such as value-added tax.
Regarding revenue reduction, de Mooij emphasized the importance of Egypt reducing energy subsidies and promoting initial public offerings (IPOs) to contribute to debt reduction.
On December 16, 2022, the IMF’s Executive Board approved a $3 billion Extended Arrangement for Egypt, spanning 46 months. This IMF-supported program for Egypt aims to preserve macroeconomic stability, rebuild financial buffers, and pave the way for inclusive and private-sector-driven economic growth.
