The overall budget deficit ratio stabilised at 2.9% of the Gross Domestic Production (GDP) during the first quarter of the 2013/2014 fiscal year, according to the Ministry of Finance’s monthly bulletin for October.
The ministerial report added that the deficit reached EGP 59.9bn, compared to EGP 50.8bn during the period between July and September in the fiscal year 2012/2013.
Domestic debt increased to register 73.5% of GDP as of the end of September 2013, at EGP 1506.3bn, a EGP 267.7bn increase compared to the EGP 1238.6bn recorded last year.
Commenting on the external debt stock the ministry said “External debt stock stood at 17.3% of GDP ($43.2bn) of end June 2013,and thereby increased by 25.7% compared to end of June 2012 debt stock.”
The ministry added that real GDP grew by 2.1% to around EGP 1608.6bn at constant prices, during the past fiscal year where public consumption and exports remained the major contributors to that surge.
In August’s monthly bulletin report, the ministry pointed out that GDP had witnessed a slight improvement during the first nine months of the fiscal year 2012/2013, growing by 2.3%.
“M2 [money supply that includes cash along with short-term bank deposits and 24-hour money market funds] annual growth continued to rise as of end July 2013 recording 19.5% compared to 8.1% in July 2012, stimulated by the increase in net domestic assets annual growth, mainly in net claims on government and GASC,” the report said.
Discussing the supply side growths, the report stated the construction sector grew by 5.3% to constitute 4.6% of GDP, and the telecommunication sector also grew by 4.9%, which translates to 2.6% of GDP. Another sector which represented 2.6% of GDP was the real estate sector, which grew by 4.2%.
The insurance and social insurance sector also grew by 3.1% while the financial intermediation sector grew by 2.7%, to represent 3.6% and 3.3% of GDP respectively.
The report stated that growth was hindered by the “below-potential performance” of some sectors, which included the 3.8% drop in Suez Canal revenues and the 2.7% decrease in the performance of the extractive industry sectors.
On 15 November, international credit rating agency Standard & Poor’s raised Egypt’s long and short term foreign and local currency credit ratings from CCC+/C to B-/B. The rating agency added that Egypt’s outlook is stable.
“The upgrade reflects our view that the Egyptian authorities have secured sufficient foreign currency funding to manage Egypt’s short-term fiscal and external financing needs,” the agency said. “We expect support from bilateral lenders to continue over the medium term as the Egyptian authorities try to address the country’s political and economic challenges.”
The agency assessed the government’s finances as “very weak”, however.
“We estimate the change in general government debt will average 12% of GDP in 2013-2016,” the agency said.