Egypt’s real GDP could accelerate to 4.9% in the upcoming fiscal year (FY 2024/2025), according to a note by Goldman Sachs, noting the current FY’s estimates at 3.5%. The financial institution also provided a positive outlook for the country’s inflation and interest rates, expecting interest payments to decline steadily over the long term.

In a note seen by the Arab World News Agency, Goldman Sachs projects that the country’s real GDP growth will average between 6-6.5% for FY2025/2026.

The US financial institution’s expectations are only slightly higher than the International Monetary Fund’s projections of 4.7%, revealed an IMF Research Department division head, Daniel Leigh, in late January.

However, the IMF may release a new statement after Egypt’s recent reforms have borne fruit, closing deals worth more than $51 billion in financing at the end of March.

Goldman Sachs explained that Egypt’s total financing needs will remain high and not fall below 30% of the gross domestic product, adding that debt burdens have risen sharply in recent years due to a combination of external financing pressures and tightening financial conditions.

Egypt aims to hit a 4% GDP growth rate during FY2024/2025, explained Minister of Finance, Mohamed Maait during his meeting with President Abdel Fattah El-Sisi, and Prime Minister Mostafa Madbouly at the end of March.

Goldman Sachs believes that Egypt can attain a primary budget surplus of 3.5% of its GDP in the coming FY, and remain at that level for the next 3 fiscal years. The estimate mirrors Egypt’s own expectations.

The note praised Egyptian authorities’ relatively strong record, highlighting the Ministry of Finance’s ability to consistently achieve a primary budget surplus over the past 6 years, averaging 1.3% of the country’s GDP.

The institution believes that the primary surplus will begin to shrink after the coming 3 fiscal years, but will remain at a positive level until FY2033/2034.

The total debt-to-GDP ratio will see a significant decline in the coming 2 fiscal years, it wrote. Including Gulf countries’ deposits with the Central Bank of Egypt, Egypt’s debt-to-GDP ratio reached a peak of 112% of GDP back in FY2022/2023, but it predicts a steady drop to 103% in FY2023/2024 and 92% during FY2024/2025.

Goldman Sachs explained that the sales of state assets contribute to non-debt financing of the budget and have provided an opportunity for the government to reduce its debt.