Egypt’s 2020/2021 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 but around three times higher than the present price, according to Reuters.
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 January 1 and March 31, the ministry said. The rate used in the 2019/2020 budget was 17.46 Egyptian pounds per dollar.
Egypt’s Cabinet approved a draft law for the budget of the 2020/2021 financial year at a meeting on Thursday.
Maait said afterwards that the budget aimed to reduce the total deficit to 6.3 percent of GDP and increase the primary budget surplus to 2 percent. This would result in public debt of 82.7 percent of GDP as of end-June 2021, he added.
Egypt’s GDP growth for the financial year that begins on July 1 could fall to 3.5 percent if the coronavirus crisis continues until December, Planning Minister Hala al-Saeed said on Thursday, down from previous estimates of around 6 percent.
