Higher debt service bill to widen Egypt’s budget deficit in FY2023/2024: Report

The report expects GDP growth rate to reach four percent in FY2023/2024, which is slightly lower than government estimates of 4.1 percent but higher than the 3.6 percent predicted by the International Monetary Fund (IMF) in an October report.

Interest payments accounted for 60.3 percent of Egypt’s total expenditure in the first three months of FY2023/2024. As a result, Egypt’s expenditure surged to EGP 790.86 billion in July-September from EGP 466.42 billion a year earlier.

In a gloomier scenario in which tourism revenue drops 15 percent owning to Israel’s war on Gaza War in Palestine, HC economist and financial analyst Heba Monir predicts that GDP growth could decelerate to 3.3 percent in FY2023/2024.

The war has already had an impact on tourism, with 50 percent of tourism bookings in Sinai being cancelled in the first weeks of the war, according to a top executive who spoke to Ahram Online in October.

Independent of the gloomier scenario, Monir also expects the Egyptian pound to lose 19 percent of its value in FY2023/2024, which would push the average inflation for the year to 33.2 percent, up from 24.1 percent in FY2022/2023.

Since March 2022, Egypt has devalued its currency three times in response to a foreign-currency crunch. With these three waves of devaluation, the pound has lost over 75 percent of its value against the US dollar since March 2022.