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UPDATE 2-Egypt expects 3.3% economic growth in 2020/21 fiscal year

(Adds background and further finance minister comments)

CAIRO, Nov 9 (Reuters) - Egypt expects its economy to grow by 3.3% in the financial year that began in July, but growth could range within a band of 2.8% to 3.5%, Finance Minister Mohamed Maait said on Monday.

Egypt lost 220 billion Egyptian pounds ($14 billion) in revenue in the final quarter of the 2019/20 financial year after the country was hit by the coronavirus pandemic, Maait said.

The government had spent 65 billion pounds of a 100 billion pound grant as of the end of June 2020, using the funds for extra staple goods and medical equipment to confront the pandemic, he said.

Egypt aims to reduce its budget deficit to 7.5% in the 2020/21 fiscal year from 7.9% in 2019/20 and is targeting a primary surplus of 0.5%, he added.

The pandemic wiped most of Egypt’s vital tourism industry, which directly and indirectly accounts for as much as 15% of gross domestic product, and generally slowed business within Egypt, analysts say.

Remittances fell by 10.5% to $6.2 billion in April-June, the central bank said last month.

The government successfully sought emergency financial support from abroad, including $8 billion from the International Monetary Fund.

Maait said that despite the pandemic, Egypt expected debt servicing costs to fall to 540 billion pounds this year from 570 billion in 2019/20.

Foreign holdings of Egypt treasuries currently stood at $21 billion, Maait said, after a sell-off during the early stages of the pandemic was reversed. Foreign holdings of Egyptian T-bills at the end of August stood at 211.5 billion pounds ($13.5 billion), according to Egypt’s central bank.

A Reuters poll of 20 economists last month forecast the economy would grow by 3.3% in the 2020/21 fiscal year, down from the 5.9% the government had been aiming for before the coronavirus pandemic hit earlier this year. (Reporting by Nadine Awadalla and Ehab Farouk Writing by Aidan Lewis and Patrick Werr; Editing by Sandra Maler and Marguerita Choy)

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