Egypt's Minister of Finance Amr Al-Garhi has confirmed that his country's public debt has risen fivefold in the last five years and is expected to continue to rise in the foreseeable future. The minister said the government is working on a medium-term plan to reduce public debt levels from 107 per cent of GDP in the previous fiscal year 2016 -2017 to 80 per cent by 2020.
During the Inclusive Growth and Job Creation Conference, organized by the International Monetary Fund (IMF) in cooperation with the Central Bank of Egypt (CBE) and the Egyptian government in Cairo, on Sunday, Al-Garhi clarified that the debt reduction plan aims first to reduce the overall deficit in the budget and achieve an initial surplus of 2 per cent of GDP, in addition to an increase of the average per capita income. He expected that Egypt will witness a significant rise in living standards during the next fiscal year.
In a press statement, the Ministry of Finance quoted the minister as saying that the success of the economic reform program has been achieved due to the support of the political leadership and its emphasis on the need to be honest and open with the society regarding the problems and challenges that the country faces.
Al-Ghari said that the reform program is difficult and comes amid huge challenges facing the country, after suffering for years from incorrect policies that could not gain the confidence of the world markets. The Egyptian economy, he noted, has been burdened by the expenses of these flawed policies.
The minister announced that "the central bank is cooperating with the government in implementing a plan to reduce the public debt to control inflation and reduce interest rates to lessen its burden on the public budget, where we expect that interest payments will be gradually reduced from current levels to 25 per cent of total expenditure over the medium term."
He noted that one of the government's priorities is to improve living standards by strengthening the social justice network and creating more suitable job opportunities so as to reduce the unemployment rate which has dropped from 13 per cent to 11 per cent this year.
He pointed out that one of the most important laws and procedures that the ministry is currently working on is preparing a simplified system for tax accounting for small enterprises in an attempt to integrate them into the formal economy while working to develop this sector by 10 to 15 per cent.
"At the moment, we cannot put pressure on the citizens, but we are working to channel part of the government subsidy to support social protection programmes and other investment projects," Al-Garhi said.
He added that the government is also working to increase Egypt's share of world trade by expanding its exports, especially in non-oil products, noting that the total exports did not exceed 20 billion US dollars in 2015. He pointed also to the government's support for the development of various Egyptian industries, especially food industries, in order to expand the industrial sector in Egypt and increase its contribution to the GDP, which currently ranges between 20 and 30 billion US dollars annually.