Giant financial services provider Fitch Solutions said it anticipates Egypt’s fiscal deficit to shrink from an estimated 9.4% of GDP in FY 2017/18 to 7.8% and 6.4% of GDP in FY 2018/19 and FY 2019/20, respectively, on the back of “robust economic growth and fiscal reforms,” Invest-Gate reports.

A projected increase in tax revenues and inflows from the gas sector, paired with the government’s continued subsidy cuts, will help increase the total government revenues while cutting down on expenditures, according to the firm’s newest report on December 11.

“Egypt has already implemented significant fiscal reforms in recent years, including the introduction of Value Added Taxes (VAT), increases in tobacco taxes and metro fares, and cuts to fuel and electricity subsidies. As a result, [Fitch Solutions] believes that Egypt recorded a primary surplus of 0.2% of GDP in FY 2017/18, the first time the country has run a primary surplus since FY 2003/04,” the report reads.

Fitch also expects primary surplus to rise to 2.1% of GDP in FY 2018/19 and 2.3% of GDP in FY 2019/20, predicting a rise of 5.0% and 5.1% in the real GDP growth during FY 2018/19 and FY 2019/20, respectively.

The GDP growth increase will, in turn, support VAT, income, and other tax collections, while gas output is also seen to surge by 20.0% in 2019 and 5.6% in 2020 – which will further grow the government’s tax intake, the report shows.

The firm underlines that Egypt’s public debt-to-GDP ratio would likely drop in the upcoming financial year, recording 78.6% of GDP, down from 84.3% of GDP in the current fiscal year.

“We caution, though, that should there be significant popular pushback against such a move, then we could see the implementation delayed or watered down substantially,” Fitch concludes.