Egypt seeks international banks to guard against the risk of oil prices

The Egyptian cabinet on Wednesday approved the start of procurement procedures with banks and international financial institutions.

Egypt has set the price of a barrel of oil in the 2018-2019 budget at $ 67, while the price of Brent crude oil is now $ 74.

The Cabinet said today in a statement that it had agreed "that the ministers of oil, mineral resources and finance begin procurement procedures with one or more banks or financial institutions against the risk of fluctuations in world oil prices ".

In April, the Egyptian Ministry of Finance said that if the world price of oil increased by about 1 dollar a barrel, it should have a negative fiscal impact on the target of total deficit of about $ 1 per barrel. approximately 4 billion pounds, or about 0.08% of GDP Total

Egypt aims to achieve an economic growth rate of 5.8% for the current fiscal year that began on 1st July, against 5.5% expected in 2017-2018.

The total target deficit is 8.4%, or 438.594 billion pounds, against 9.8% equivalent to 431.081 billion pounds expected in 2017-2018. "The 8.4% budget deficit target remains ambitious, but we could record a deficit of between 9% and 9.5% at the end of 2018-2019," said Hani Farahat, chief economist investment bank CI Capital.

He adds: "The risk will be if the world oil price rises by $ 80 a barrel, while the government will raise oil prices but at a slower pace than before, linking domestic prices overall in December, as part of its agreement with the IMF International Level.

The Egyptian government increased fuel prices by 66.6% last month, continuing its plans to cut subsidies that saw increases recent prices of water and electricity and subway tickets.