Egypt's budget sets ambitious revenue targets

Significance

The budget envisages an overall deficit of 7% of GDP, revised upwards from an earlier draft because of the effects of devaluation and higher interest rates on public debt servicing costs. The government is aiming for a primary surplus (excluding interest payments) of 2.5% of GDP. This is based on increases in revenue from taxation and other sources.

Impacts

• Investor confidence in government debt will depend on maintaining a flexible exchange rate and offering premium interest rates .
• The 2.5% of GDP primary surplus target will help bring down public debt over the medium term.
• Cairo will likely shape its foreign policy to help attract investments and support economic objectives.