Egypt says it has primary budget surplus as it seeks to revive economy

CAIRO — Egypt on Thursday said it had a primary budget surplus for the first time in 15 years and said it was committed to paying oil companies' debts by end of 2019 as it seeks to lure investors to revive a crisis-hit economy.

Cairo has enacted a raft of tough austerity measures backed by the International Monetary Fund (IMF) since 2016, hoping for a strong financial comeback as it recovers from years of political upheaval.

President Abdel Fattah Al Sisi's government devalued the Egyptian pound by half in 2016, and has pushed through steep fuel and electricity subsidy cuts this year, in measures praised by some economists but lamented by many Egyptians who say they are struggling with soaring living costs.

Finance Minister Mohamed Maait said Egypt achieved a 0.2 per cent primary budget surplus, worth 4 million Egyptian pounds ($223 million) in its 2017-2018 fiscal year. It is aiming for a 2 per cent primary surplus in the current fiscal year.

Egypt's fiscal year runs from July to June.

Primary budget figures do not factor in interest payments on government debt.

The country expected its 2017-2018 budget deficit to stand at 9.8 per cent, slightly above the 9.1 per cent it said last year it was targeting.

Maait told reporters that revenues expected from the 2018-2019 budget were around 989 billion Egyptian pounds ($55 billion), 817 billion of which would be spent on debts and interest.

Foreign reserves rose by the end of June to $44.258 billion from $44.139 billion, the central bank announced separately, continuing their climb since Egypt secured the $12 billion IMF loan.

Gas debts down

Egypt wants to woo foreign investors and increase other crucial sources of income such as tourism, which declined drastically in recent years because of political unrest and a precarious security situation, although tourism revenues 

The discovery of large amounts of offshore gas in Egyptian waters, including the giant Zohr Gas Field, has caused hope for another source of revenue with Egypt as a potential gas hub for the region.

Petroleum Minister Tarek El Molla told reporters on Thursday Egypt was committed to paying off its debts to foreign oil companies by the end of 2019.

Those debts stood at $1.2 billion at the end of June, their lowest since 2010 when they were around $1.3 billion, he said.

El Molla repeated that Egypt intended to increase production from the Zohr field to 56 million cubic metres of gas per day by the end of this year — up from current levels of around 33 million cubic metres.

Discovered in 2015 by Italy's Eni, Zohr contains an estimated 8 trillion cubic meter of gas.