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Egypt to Confront Global Economic Crisis with Ambitious Financial Goals

Egypt to Confront Global Economic Crisis with Ambitious Financial Goals

Monday, 16 May, 2022 - 09:00
Egyptian Prime Minister Mostafa Madbouly, speaks during a news conference to announce the Egyptian state's vision to deal with the global economic crisis at the headquarters of the Investment Authority in Cairo, Egypt May 15, 2022. (Reuters)

Cairo announced on Sunday a number of ambitious financial goals, in wake of successive global economic crises, the latest of which are the repercussions of the war on Ukraine that impacted most of Egypt’s economic sectors.

Prime Minister Mostafa Madbouly said he wanted private investment to rise to 65% of the country’s total within three years, up from around 30% at present.

He outlined a wide array of state assets that the government will offer to private investors, part of a plan to fully withdraw from certain sectors of the economy as it seeks to attract $40 billion in investment over the next four years.

“We will offer projects to the private sector in electric vehicles, data centers, networks for oil and gas and expansion of gas liquefaction plants, communication towers, and wind power,” Madbouly said at a televised news conference to outline the state’s vision to address the financial crises.

It will also eventually open up renewable energy projects, desalination plants, education and banking assets to private investment.

Madbouly told reporters the government aimed to decrease total debt to 75% of gross domestic product by June 2026 from 86% currently, and its budget deficit to 5% from 6.2%.

He added that Egypt seeks to achieve a primary surplus of about 2% of the GDP annually from its current 1.5% target.

It also aims to reduce the cost of borrowing and government debt service to 2% of the GDP in the 2025-26 fiscal year.

Moreover, Madbouly revealed Cairo is expected to reach a new program with the International Monetary Fund “within months.”

In March, Egypt said it was in talks with the IMF about potential funds, in addition to technical support to hedge against the economic effects of the Russia-Ukraine crisis, should it be prolonged.

The PM said the Egyptian economy had suffered EGP130 billion ($7 billion) in direct losses on a year-to-year basis due to this war, as well as EGFP335 billion ($18.3 billion) in indirect losses.

Egypt, the world's top wheat importer, is working to buy wheat from other regions rather than its major suppliers Russia and Ukraine, whose exports are being disrupted by the war.

Egypt has strategic reserves of wheat sufficient to cover its needs for four months, Madbouly asserted.

Egypt also has strategic reserves of vegetable oils to cover six months, he added.

The Supply Ministry confirmed that it is considering this month adding wheat from India to 16 other national import origins accepted by its state grains buyer.

It approved the import of Indian wheat, only for India to ban wheat exports on Saturday as a scorching heat wave curtailed output and domestic prices hit a record high.

However, India said it would still allow exports backed by letters of credit that were already issued, and sales to countries that request supplies “to meet their food security needs.”

Any agreements by Egypt's government to purchase Indian wheat will not be affected by an export ban announced by New Delhi, Egypt's supply minister said on Sunday.

“For India, we are talking with them on the basis of a government agreement. The ban exempts governments including the government of Egypt,” Minister Ali Moselhy said at the news conference.

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