Egypt's Macroeconomics in a Glance (2/2)

After a long Feast vacation, we are back in our weekly bulletin about "Investment in Egypt", coming to you from Cairo, Egypt.

Due to the foggy specter looming about interest and FX rates, we will deter our own analysis on the recent changes on the interest rates in USA and the repercussions on the Egyptian economy after the planned meeting of the Monetary Policy Committee (MPC) of the Central bank of Egypt (CBE), on May 19, 2022.

For progress update until May19th, you can follow my TIK-TOK flashes on, www.tiktok.com/@ahmedelashkar77.

"OK, geek, welcome back after this long vacation, we have unfinished business here, aren't we?"

"Yes, we have? we will continue in this bulletin, the second and final glance on Egypt's Macroeconomics on a Glance."

We will start with the "Total Subsidies" in the Public Budget for the financial year (2021/2022), the Government has been very active in this dossier for balanced and fair delivery of the subsidy for the appropriate recipients.

Unfortunately, the former regime(s), when allocating the subsidies, were biased and contained many loopholes which needed to be tackled.

According to the Diagram to the right of IDSC, the EGP value for the total subsidies for the financial year (2021/2022) amounted to EGP 138.3 Bn., which are allocated among two main arteries, i.e. subsidy for Ration Goods and Petroleum Goods. Concerning the latter, the government had adopted a rigid policy to liberate the petroleum products' prices, especially the fuel, which sloped downwards from EGP 120 Bn. in 2012/2013 to EGP 18.4 Bn. in 2021/2022.

While, concerning the former, the Ration Goods' subsidy, the curve sloped upwards from EGP 32.6 Bn. in 2012/2013, to EGP 87.2 Bn. in 2021/2022 reflecting the diligent efforts in directing the subsidy to mitigate the negative effect for the rising inflation's curve.

• The Diagram to the left of the IDSC, depicts the different levels of the tax revenues' stream in EGP value in addition to the percentage of the tax stream to the GDP.
• Generally speaking, the latter curve is slopping upwards since the year 2013 until 2022 with a CAGR amounting to 1.2% for the whole nine years. The prudent increase is due to the extreme efforts of the consequent governments to increase the tax society, decrease the tax rates, diminish the double bookings' practice and boost the tax law with many amendments for more efficient tax regime.
• Still with the diagram, the EGP value sloped upwards from EGP 251.1 Bn. in 2013 and ended with almost a Trillion EGP, with a CAGR of 16.3%, which reflects all endeavors for the last nine years.

"Why the EGP devaluates?", will you get to the point geek?!

"Wow, you think you are smart dude? I will get to to the heart now."

1. Look at the adjacent Diagram of the IDSC, the dollar value of the exports is developing in a stagnant curve of CAGR amounting to 1.5%, which is prudent to a great extent, especially when compared to the curve of the imports at a CAGR 1.92% of for the same years. Still the gap of the US$ 42.1 Bn. net trade deficit is hurting our US$ federal reserve.
2. The Ukrainian/Russian crises put gray shades over the tourism industry after it had a pretty rebound in 2019 to reach US$ 12.6 Bn. (former 2010 levels), while accomplished a CAGR of (-ve) 6.98%, the effects of the last two elements put extreme pressure on the federal reserve of the US$ and the FX price.
3. The FDI figure in the Diagram increase by the US$ 1.8 Bn. direct investment from UAE to land on US$ 7Bn. in May 2022.

Last but, not least, a general look on the updated figures of Egypt's budget for the financial year 2022-2023.

In a general comment on the 2022/2023, the targeted debt to GDP ratio for the budget year is only diminishing by only 1%, despite still in safe zone, while reflects the noticeable dependence for the government on debts still to fuel the budget deficit and the giga projects.

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