These figures were shown in a recent report by the US investment firm, Goldman Sachs. They were against the backdrop of the measures announced by the Egyptian government during the extraordinary meeting of the Central Bank of Egypt (CBE) in March 2024.

Goldman Sachs expects Egypt's average growth rate to range between 6 percent and 6.5 percent from the fiscal year 2025, reflecting the importance of the comprehensive economic reform programme the country has adopted. This programme is based on integrated economic policies that strongly support the empowerment of the local and foreign private sectors to drive economic growth and employment. It focuses on sectors such as agriculture, industry, communications, information technology, and tourism to stimulate local production and exports.

The Goldman Sachs' report said that the Egyptian authorities have a relatively strong record financially. This is particularly impressive when considering the challenges facing the Egyptian economy over the past few years, which include the Covid-19 pandemic, which led to a decline in revenues and an increase in spending.

The Egyptian Ministry of Finance also said that Goldman Sachs expected the Egyptian government to achieve a primary surplus of 3.5 percent of GDP in 2024/2025 and added that Goldman Sachs also expected the surplus to remain at this level over the next three fiscal years. The Ministry of Finance has consistently been able to achieve a primary budget surplus over the past six years, at an average of 1.3 percent of gross domestic product (GDP).

How will the budget deficit move with higher interest rates?

However, Goldman Sachs expects that the total deficit will remain relatively high due to high interest costs, declining to only 5 percent of GDP over the next 10 years. The US Bank also expects that the government's total financing needs will remain high, and not fall below 30 percent of GDP. The Ministry of Finance confirms that recent investment flows, supported by the International Monetary Fund (IMF), will alleviate financing pressures.

Goldman Sachs said that the initial public offering (IPO) programme also provides budget financing and creates an opportunity for the government to reduce its debt. It expects Egypt's debts to decline in the long term as a result of strong economic growth. Interest payments fell to less than 50 percent of revenues, according to Egyptian financial data in the fiscal year 2022-2023.

Foreign exchange reserves are at the highest level since February 2022

Egypt's foreign exchange reserves rose by about USD5 billion by March 2024, reaching their highest level in 25 months. According to data from the CBE, Egypt's official foreign reserves reached USD40.4 billion, compared to about USD35.3 billion in February 2024. This figure is the highest level since February 2022. The CBE's investments in its gold reserves also increased by about USD680 million, to more than USD9 billion, while it increased its investments in liquidity in foreign currencies by about USD4.7 billion, to reach USD31.3 billion.

At the same time, the CBE revealed that deposits not included in official reserves rose to USD8.4 billion, compared to USD6.9 billion in February 2024. This increase in foreign reserves of the CBE coincided with Egypt receiving USD5 billion from the proceeds of the Ras El Hekma deal at the beginning of March. Egypt also reached an agreement with the IMF and liberalised the exchange rate.

On March 6, 2024, the CBE liberalised the exchange rate and the Egyptian pound lost about 38 percent of its value before recovering, so that its value fell to 32 percent. According to the monthly report of the Egyptian Stock Exchange (ESX), net purchases of bills and bonds by Arabs and foreigners amounted to about EGP472 billion (USD10 billion) in March.

Photo. Goldman Sachs expects the Egyptian economy to steadily grow (by Adobe)