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Egypt Targets Growth by 6% in 2018, Reducing Deficit to 8.4%

The Egyptian economy is expected to grow by about 5.7 to six percent this fiscal year. (AFP)
The Egyptian economy is expected to grow by about 5.7 to six percent this fiscal year. (AFP)
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Egypt Targets Growth by 6% in 2018, Reducing Deficit to 8.4%

The Egyptian economy is expected to grow by about 5.7 to six percent this fiscal year. (AFP)
The Egyptian economy is expected to grow by about 5.7 to six percent this fiscal year. (AFP)

The Egyptian economy is expected to grow by about 5.7 to six percent this fiscal year compared to 5.3 percent in 2017, according to Minister of Finance Mohamed Maait.

Maait pointed out that the Egyptian economy has a strong ability to attract investment, in addition to the government efforts to reduce unemployment.

The new growth forecast for the fiscal year 2018-2019, which began on July 1, is 0.2 percent higher than the previous estimate of 5.8 percent.

“Egypt is targeting a budget deficit of 8.4 percent of GDP for the 2018-19 fiscal year that ends in June, compared with 9.8 percent in the previous year,” the minister noted.

“Our economy has grown faster than we’ve expected, our GDP has grown faster than the falling of our debt,” he added.

He stated that the Egyptian government has recently sought to attract investments through many actions, including improving infrastructure through road projects and others.

“We are working to overcome all obstacles for investors by developing the tax system to become easier and less burdensome in order support competition and encourage the private sector as we develop the customs law to suit global competitiveness,” he stressed.

Egypt has been working to improve efficiency, and the government has been giving priority to improving citizen service, providing social insurance coverage and encouraging the private sector to contribute to development more in the coming years, according to Maait.

Providing energy supplies is a top priority on the government agenda through diversifying energy resources and securing all citizens' needs, he said.

On the other hand, the minister stated that “the global financial crisis in 2008 had a negative impact on the Egyptian economy, but the country was able to overcome it, praising the performance of the banking sector at the time.

He explained that there are challenges facing the economy and must be dealt with.

He stressed the need to increase the productivity of the economy, in addition to the need to attract investment and encourage the private sector to implement projects.

“The budget needs reduction in the public debt, which is stated in the strategy to be presented by the Ministry of Finance to the government, which includes public debt management,” he further noted.

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Dollar Near 3-1/2 year Low as Fed Easing, Trump Bill in Focus

US dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration
US dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration
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Dollar Near 3-1/2 year Low as Fed Easing, Trump Bill in Focus

US dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration
US dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

The US dollar edged off multi-year lows against major peers on Wednesday though remained under pressure as traders considered the potential impact of President Donald Trump's spending bill, and looming tariff deadlines.

Market participants are in a holding pattern until they get clarity on those matters and as they await US jobs data for June.

The euro was down 0.33% at $1.1770, on Wednesday, but close to its highest since September 2021 hit Tuesday, and the pound was down 0.15% at $1.3722, after hitting a three-and-a-half year top the previous day, Reuters reported.

With the dollar up 0.4% on the Japanese yen at 143.97, that left the dollar index, which measures the currency against six major counterparts, slightly higher at 96.744, but near its overnight over three-year low.

A plethora of factors has weighed on the US currency this year, and it has had its worst first half of a year since the era of free-floating currencies began in the early 1970s.

These include policy uncertainty that makes asset managers jittery about some US holdings and spurs them to increase currency hedges, an unwinding of stretched long dollar positioning, and increased bets in recent weeks on the Federal Reserve easing this year.

Traders were keeping an eye on the European Central Bank's annual conference in Sintra, Portugal, where Fed chair Jerome Powell reiterated on Tuesday that the Fed is taking a patient approach to further rate cuts. Still, he did not rule out a reduction at this month's meeting, saying everything depended on incoming data.

That raises the stakes for the monthly non-farm payrolls report on Thursday - a day earlier because of Friday's July 4 holiday. Indications of labor market resilience in the US JOLTS figures overnight saw the dollar rise off Tuesday's lows.

"Weaker economic data is still ultimately needed for (US rate cuts) and the JOLTS data throws up further doubts over the timing of a more pronounced labor market downturn that would encourage the Fed to restart monetary easing," said Derek Halpenny, head of research, global markets EMEA, in a note.

Traders are keeping a close watch on Trump's massive tax-and-spending bill, which could add $3.3 trillion to the national debt. The bill, passed by the US Senate, will return to the House for final approval.

"The confirmation that this is an increase in issuance, an increase in government spending well beyond its means, is not necessarily good news for the Treasury market, and it's arguably one of the reasons the dollar's going down," said Rodrigo Catril, a strategist at National Australia Bank.

Also weighing on the US currency has been Trump's continued efforts to get Powell to cut rates, putting Fed independence in the spotlight.

On Monday, Trump sent the Fed chair a list of global central bank key rates adorned with handwritten commentary, saying the US rate should be between Japan's 0.5% and Denmark's 1.75%, and telling him he was "as usual, 'too late.'"