Egypt’s 2020-2021 draft budget is based on $61 oil barrel price
Egypt’s 2020-21 draft budget is based on an oil price of $61 per barrel, the finance ministry said on Monday, down from $68 in the current budget which ends on June 30 but around three times higher than the present price.
Oil prices fell sharply on Monday, with U.S. crude briefly dropping below $20 and Brent hitting its lowest in 18 years, on heightened fears that the global coronavirus shutdown could last months and demand for fuel could decline further.
“I have to protect the budget. What if the price of a barrel of oil increased? How will you finance it? What will you do? The world is going through exceptional circumstances,” Finance Minister Mohamed Maait said in a televised interview.
“If the price per barrel increases to more than $80, what will you do?,” he added, predicting that demand for oil will increase after the end of the coronavirus crisis.
The exchange rate for the dollar used in the draft budget is equal to the prevailing average exchange rate in the market between Jan. 1 and March 31, the ministry said. The rate used in the 2019-20 budget was 17.46 Egyptian pounds per dollar.
Egypt’s cabinet approved a draft law for the budget of the 2020-21 fiscal year at a meeting on Thursday.
Maait said afterwards that the budget aimed to reduce the total deficit to 6.3% of GDP and increase the primary budget surplus to 2%. This would result in public debt of 82.7% of GDP as of end-June 2021, he added.
Egypt’s GDP growth for the fiscal year that begins on July 1 could fall to 3.5% if the coronavirus crisis continues until December, Planning Minister Hala al-Saeed said on Thursday, down from previous estimates of around 6%.