$854mln earmarked for economic stimulus in Egypt’s FY 2024/25 budget

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Egypt’s government has unveiled a new budget for the 2024/25 fiscal year (FY), emphasizing economic stimulus, social support, and investment in key sectors. A significant portion of the budget, EGP 40.5bn, has been allocated to stimulate economic activity, with a particular focus on the industrial and export sectors.

The budget, recently approved by Egypt’s House of Representatives, outlines a 29% increase in public expenditure, reaching EGP 3.87trn. This represents 22.6% of the projected GDP for the upcoming fiscal year.

Egyptian Finance Minister Mohamed Maait highlighted the budget’s focus on human development, particularly in health and education. Allocations for health have been increased to EGP 496bn, while education receives EGP 565bn for pre-university education, EGP 293bn for higher education, and EGP 140.1bn for scientific research.

The budget also addresses social protection for vulnerable groups and aims to improve living standards for middle-income earners. EGP 635.9bn has been set aside for subsidies, grants, and social benefits, marking a 19.3% increase compared to the estimated divs for the current fiscal year. This includes allocations for petroleum product subsidies, subsidized goods, social security pensions, social housing, and health insurance.

A significant portion of the budget, EGP 40.5bn, has been allocated to stimulate economic activity, with a particular focus on the industrial and export sectors. The government anticipates that tax revenues will grow by 30.5% to exceed EGP 2trn.

Furthermore, EGP 496bn has been earmarked for investments, though 44% of these are self-financed and do not impact the budget deficit. A cap of EGP 1trn has been placed on public investments for all state agencies during the next fiscal year.

The total deficit in the budget for the upcoming fiscal year is projected to be around EGP 1.2trn, which equates to 7.3% of GDP. This is compared to an updated estimate of EGP 555bn, or 4% of GDP, for the current fiscal year.

The government aims to achieve a primary surplus of EGP 591.4bn, representing 3.5% of the estimated GDP for the next fiscal year.

The budget also includes provisions for a 50% increase in the minimum wage to EGP 6,000 per month, along with increases in salaries for state employees and adjustments to tax exemption limits.

Maait confirmed that the newly approved FY 2024/25 budget is part of a strategy to reduce general government debt to under 80% of GDP by June 2027.

For the new fiscal year, the government has set a state’s general budgeting bodies debt ceiling of EGP 15.1trn, equivalent to 88.2% of GDP. This marks a decrease from 96% in FY 2022/23, with expectations for the div to drop below 90% by the end of June 2024.

The total debt of the general government, including both the budget and economic public entities, stands at EGP 16.4trn, equivalent to 96.4% of GDP. This div is also the newly set debt ceiling for the general government.

Any excess over the debt ceiling would require approval from the President, Cabinet, and House of Representatives, and only in cases of national necessity.

Moreover, the total government expenditure for the new fiscal year is projected at EGP 6.6trn, with revenues estimated at EGP 5.3trn, excluding inter-budgetary relations between the state’s general budget and the budgets of the 59 economic public entities.

Tax revenues will constitute 38.2% of total government revenues and 11.8% of GDP, while non-tax revenues account for 61.8% of total revenue and 19.2% of GDP.

The state’s general budget has a primary surplus of 3.5% of GDP, while the general government budget’s primary surplus is 3.7% of GDP. The overall deficit of the state’s general budget is 7.3% of GDP, compared to 7.7% for the general government budget.