Mohamed Maait, Minister of Finance: Interview

Interview: Mohamed Maait

What are the key economic priorities following completion of the IMF-backed reform programme?

MOHAMED MAAIT: The IMF programme was part of a model designed by the Egyptian government, so the reforms began before IMF backing and they will continue after it. Egyptian leadership is committed to economic reforms that will put the country in a sustainable position via three routes: monetary reform, fiscal reform and structural economic reform – which is our top priority in the coming period. This final pillar is focused on strengthening the competitiveness of sectors which contribute to Egypt’s economic growth, primarily through effectively developing policy initiatives and soft infrastructure.

Egypt’s future will depend on sustaining economic growth and creating the right types of jobs to support a growing population. With close to 1m new graduates entering the job market each year, the government cannot supply these jobs; the only option is to create permanent jobs in the private sector. This is why we need to encourage private sector participation through reforms that make the business environment more attractive in every sector – whether it is oil and gas, tourism, manufacturing, ICT, construction or logistics.

How does the ministry plan to reduce public debt to approximately 80% by June 2022?

MAAIT: As the focus turns to sectoral reform, we need to ensure that what has been achieved through broad economic initiatives will continue. A key priority is the ongoing implementation of sound fiscal policies, which have reduced the budget deficit to 7.9%. In FY 2022/23 we aim to achieve an overall deficit equal to 4.6%, while maintaining the 2% annual primary budget surplus.

The government is in a strong financial position, having reduced debt from 103% of GDP in 2017, to 92.65% in 2018 and 84.87% in 2019. Continuing this trend to reach 77.5-82.5% in 2023 will make it possible to invest more in human capital development and social protection initiatives like the national health insurance programme – which was already implemented in Port Said and will be gradually rolled out across the country. In order to achieve these goals, the government is working to increase revenue by raising efficiency in tax collection, widening the tax base and encouraging economic formalisation. We are also working on streamlining and reprioritising expenditure with a focus on productive spending. Streamlining subsidies is a vital step towards boosting efficiency and encouraging companies to rationalise their business models, while allowing the government to spend on those in need – rather than on those who consume the most.

In what way is the ministry balancing the need to increase tax revenue and encourage investment?

MAAIT: These two priorities are well aligned because they both rely on creating a clear and competitive tax and Customs environment. This means modernising laws and regulations, as well as becoming more adaptable to technological innovation. By limiting cash payments on any transaction to LE500 ($30.82), businesses and individuals are encouraged to use the Meeza card or create a bank account. This will help to formalise Egypt’s grey economy by expanding the size of the tax base and creating a fair, competitive environment. Furthermore, requiring taxes to be filed electronically and digitalising Customs procedures will boost efficiency, facilitate cross-border trade and establish Egypt as an increasingly attractive logistics centre.

While these steps are important, much work remains to be done to make Egypt a more appealing destination for foreign direct investment – particularly in sectors such as industry and manufacturing, health and education. These are industries that can create permanent jobs, but limited reforms have been made in recent decades. We are now working to make the country more attractive for local investment and businesses already in operation, where efficiency of taxation and reducing bureaucratic hurdles are important factors.