Madbouly made the remarks during the opening session of the 2022 Egyptian Economic Conference which started on Sunday in the new administrative capital east of Cairo in the presence of President Abdel-Fattah El-Sisi.
Since the start of the Russian-Ukrainian war on February 24, the Egyptian pound has lost more than 20% of its value against the US dollar, plunging to a new low amid a shortage of foreign currency.
On Sunday, the dollar rate reached 19.6 EGP in almost all Egyptian banks, compared to around 15.77 EGP in early March.
Meanwhile, Egypt is working to control the rate of inflation, which has hit a four-year high of 15% since February.
Senior government officials, renowned economists, intellectuals, thinkers, specialists, businessmen, as well as representatives of more than 80 political parties and parliamentarians participate in this three-day event.
The conference is the fourth of its kind in Egypt in the past four decades, with the last taking place in 2015 amid the onset of economic reforms and waves of terrorist attacks that have hit the country, Madbouly noted.
In an extended speech, Madbouly reviewed various economic challenges and indicators over the past decade, urging the conference to “agree on a clear roadmap for the most important economic sectors.”
He stressed that this roadmap should be translated into executive plans to be implemented in the near future.
Egypt, like the rest of the world, has experienced economic difficulties due to the Russian-Ukrainian crisis, Madbouly said, pointing to the global slowdown in growth, the unprecedented increase in inflation rates, the outflows of capital and rising global debt.
Egypt has seen capital outflows worth $20-25 billion in the last period amid the crisis, Madbouly noted.
Madbouly said Egypt had experienced such outflows before, pointing to the loss of $477 billion in 2011 and 2013, including $20.3 billion in foreign exchange reserves.
Review of economic indicators
Reviewing economic indicators, Madbouly said Egypt’s ratio of public debt to its gross domestic product (GDP) had fallen from nearly 103% in 2016 to 81% before the coronavirus pandemic.
The pandemic, however, has reversed this path.
Madbouly expects the debt-to-GDP ratio to reach 90% this fiscal year amid the Russian-Ukrainian war, but stressed that the state aims to bring the ratio down to 71.9% by 2027.
Egypt’s external debt-to-GDP ratio also fell from 150% to 31.7% in the 1990s thanks to an agreement with the Paris Club in 1991, under which Western countries agreed to reduce the Egypt’s debt totaling $43 billion, the prime minister said.
The Paris Club has 22 permanent members from major creditor countries with the aim of finding lasting solutions for debtor countries experiencing payment difficulties.
At the end of June, Egypt’s external debt reached 34.1%, Madbouly said, noting that safe levels ranged from 30 to 50%.
The prime minister, however, noted that Egypt’s high external debt-to-export and debt-service-to-export ratios are beyond safe levels.
“It’s all of our roles as the state, business community and private sector to figure out how to work to bring these numbers down to safe levels in Egypt,” Madbouly said.
Madbouly noted that 73% of Egypt’s external debts are medium and long-term liabilities.
For five consecutive years, Egypt has had a primary surplus, meaning the country’s revenue has exceeded government spending excluding debt service, Madbouly explained.
He said this allows the country to repay its debts, noting that Egypt’s agreements with the International Monetary Fund (IMF) always include the condition that Egypt achieves this surplus.
“Finishing touches” to the IMF program
In this regard, Madbouly said that Egypt was “putting the finishing touches” on its new economic reform program with the IMF.
This comes a week after the Central Bank of Egypt (CBE) and the Ministry of Finance announced that Egypt and the IMF had reached an agreement on economic and structural policies and reforms.
Egypt had applied to the IMF in March for a new loan under a new economic reform program to deal with the harsh repercussions of the Russian-Ukrainian conflict on the Egyptian economy.
“The Egyptian state has succeeded in restoring stability to the economy despite the difficulty of the political and economic crises,” Madbouly said during his speech.
The Prime Minister, however, stressed that Egypt was one of the countries most affected by the Russian-Ukrainian crisis.
After the end of the worst of the coronavirus pandemic crisis, Egypt managed to achieve a growth rate of 9% in the first half of the 2021/2022 financial year.
“However, the Russian-Ukrainian crisis has put great pressure on us, as on all countries in the world,” Madbouly said, noting that the crisis has crippled Egypt’s economic recovery.
The prime minister noted that Egypt still faces “chronic” development challenges, including overpopulation, adding that the country’s population has grown by 60 million over the past four decades.
Empowering the private sector
To improve the economy, Egypt has implemented major national projects over the past decade with a cost of seven trillion EGP, Madbouly said. More than 90% of these projects were implemented by the private sector, he added.
The share of the private sector in GDP in Egypt reached 75% in the financial year 2021/2022, he pointed out.
On Saturday, the cabinet also said the conference would focus on Egypt’s policy paper on public ownership, which aims to raise the private sector’s contribution to the national economy to more than 65%.
Conference Focus
The conference was called by El-Sisi in early September when he urged the government to hold an economic conference to discuss current economic conditions and ways to improve them.
The conference will include three tracks: macroeconomic policies, broadening the scope of private sector contribution to the national economy and developing a roadmap for economic priorities, the cabinet noted on Saturday.
In addition, El-Sisi instructed Prime Minister Madbouly to raise eight issues raised by the government’s national dialogue subcommittees on economic policies for debate at the conference.
The conference will also feature round tables with the participation of government officials, including the Prime Minister, as well as intellectuals, economists and representatives of political parties.
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