Finance Ministry aims for 5% growth rate, 9.5% deficit in FY 2015/16

The Finance Ministry laid out its targets for fiscal year 2015/16, which starts on July 30, in a statement released Wednesday afternoon.

The government’s goals include:

• A gross domestic product (GDP) growth rate of 4.5 to 5 percent for FY 2015/16, reaching 6-7 percent by FY 2018/19.
• 11.9 percent unemployment, one percentage below the current level, to reach 10 percent unemployment by FY 2018/19.
• A budget deficit of 9.5-10 percent of GDP in FY 2015/16, reaching 8-8.5 percent by FY 2018/19. The ministry expects a deficit of 10.5-11 percent of GDP this financial year, compared to 12.8 percent in 2013/14.
• Public debt equivalent to 91-92 percent of GDP, reaching 80-85 percent of GDP by FY 2018/19. Debt is expected to reach 93-94 percent of GDP in the current fiscal year, compared to 95.5 percent of GDP in FY 2013/14.
• Inflation rates of 10-11 percent by FY 2015/16, reducing to 7-8 percent by FY 2018/19.
• Sufficient foreign reserves to cover 3.5 months of imports. As of the end of January, Egypt had less than three months of import cover.
• To increase spending on health, education and scientific research to 10 percent of GDP by FY 2016/17. The ministry estimates spending this fiscal year will reach 7.2 percent of GDP.

The ministry noted it will face serious challenges as it attempts to reach these targets, including a heavy commitment of resources to wages and pensions, public debt and interest payments.

Its economic strategy will attempt to balance three axes: Fiscal and monetary policy aimed at reducing the deficit and public debt, encouraging foreign investment and large development projects, and programs aimed at ensuring inclusive growth, such as cash transfers and social services.