Egypt aims to achieve an economic growth rate of 5.2% during the coming fiscal year according to the financial statement for the FY 2016-2017 budget, said Finance Minister Amr Al-Garhi on Sunday during his speech to parliament.
The economy of Egypt—the biggest Arab country in terms of population—is suffering from many difficulties after tourists and foreign investors stopped coming to Egypt following the aftermath of the 25 January Revolution. Egypt is seeking to revive its economy through tax and legislative reforms.
According to the minister, the ambition to achieve an economic growth of more than 5% are realistic, but it will require implementing significant reforms, increasing revenue, and minimising expenses to reduce the budget deficit.
In his statement about the FY 2016-2017 budget before the House of Representatives, the minister said the growth rate of total domestic production decreased to 4.5% during the first half of the current fiscal year, compared with 5.5% year-over-year.
The government lowered its expectations on having an economic growth rate of 4.4% by the end of the current fiscal year, down from an estimated target of 5%, especially after the Russian plane crash in Sinai in October 2015.
The minister contended that the parliament should approve the value-added tax (VAT) draft, which will substitute the sales tax, in addition to the real estate tax that will be applied soon. Consequently, he said, the resources of the state will increase.
Egypt achieved an economic growth of 4.2% during FY 2014/2015, but according to the minister the government is optimistic to reach 6.2% economic growth by FY 2019/2020.
Fakhry Fiki, former assistant executive director of the International Monetary Fund (IMF), stipulated that the government must succeed in implementing its estimates for the deficit reduction rates and increased economic growth, which includes controlling public expenditure, which has been growing at an increasing rate—widening the deficit gap and inflating public debt.
The coming fiscal year’s budget targets to reduce the overall deficit to about 9.8% against the projected deficit by 11.5% during the current year.
He stated that the government should accelerate improving the business environment and reassure the national and international business economic communities so that it will attract more foreign investment and contribute in implementing projects to reduce the unemployment and increase tax revenue—the main source of state resources.