WB revises down its forecast for Egypt GDP growth in FY2022/2023

In its economic updated report for MENA region, the WB noted its forecast for GDP growth in Egypt for these two fiscal years falls below the 6.6 percent achieved by the country in FY2021/2022.

The WB report cited improvements in the country’s reserves due to the increase in revenues of tourism and Suez Canal as well as foreign financing.

However, the WB report found that hard currency shortage in the country persists.

Moreover, the WB report said that the country’s capital and financial account would remain under pressure.

The WB report expects that the budget deficit would widen to seven percent of GDP at the end of the current FY2022/2023, up from 6.2 percent in FY2021/2022.

Fiscal pressures and the valuation effect from the Egyptian pound devaluation are projected to drive the country’s debt-to-GDP ratio to projected 95.5 percent by end of current FY2022/2023, up from 88.3 percent a year earlier.

“The $1.5 billion Sukuk [that were recently issued] provided some relief for external debt repayment during current FY2022/2023,” the report noted.

However, the WB cautioned that the burden of the high interest rate of these Sukuk “may discourage further issuances before international financial conditions improve.”