The World Bank Group (WBG) has expected Egypt’s economic growth to slow down to 4.5% in fiscal year (FY) 2022/2023 from 6.6% in FY 2021/2022, according to WBG’s recent Egypt Economic Monitor report.

Thereafter, growth is likely to edge up as the North African country maintains macroeconomic stabilization and structural reforms, the report added.

Inflation is expected to exceed the Central Bank of Egypt’s (CBE) target range and remain in double digits in FY 2022/2023 impacted by the depreciation of the EGP, supply bottlenecks, and the potential changes in fuel prices, the report showed.

Higher interest rates, accompanied by the government social mitigation package, are likely to cause a slowdown in fiscal consolidation through FY 2022/2023, with the fiscal space projected to remain constrained by the need to service debts as interest payment accounted for 32% of total spending in FY 2021/2022, the World Bank noted in its report.

The social measures announced by the government in March, July, and October 2022 are forecast to provide partial mitigation, however, the poverty rate may rise due to inflation reflected in real incomes, the report explained.

Regarding the state’s FY2022/2023 budget, the international financial institution expected spending on health and education to drop to 1.3% and 2% of gross domestic product (GDP), respectively.

Moreover, the World Bank projected that Egypt’s debt-to-GDP ratio would resume its downward trajectory over the medium-term.

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