Egypt approves 2023/24 draft budget, reduces growth targets to 4.1%

CAIRO  30 March 2023: The Egyptian Cabinet approved, Wednesday, the draft budget for the next fiscal year 2023/2024, which reduced growth targets to 4.1 percent, compared to 5 percent announced a few days ago.

 

This is the second time that the growth target for the next fiscal year has been lowered. Last December, Finance Minister Mohamed Maait announced a target growth rate of 5.5 percent.

 

The Minister of Finance said that the budget includes targeted reform measures that contribute to the primary surplus reaching 2.5 percent of the gross domestic product (GDP). It is the highest primary surplus that is targeted in the framework of efforts to reduce government indebtedness as a percentage of the GDP, and it is also higher than the primary surplus targeted in Egypt's program with the International Monetary Fund at 2.1 percent.

 

The Ministry of Finance estimated that the inflation rate for the next fiscal year at 16 percent. 

 

Egypt raised its expectations for revenue growth from the figures it announced a few days ago, to achieve a growth of 38.4 percent instead of the announced 31 percent, supported by an increase in tax revenues by 28 percent, in light of the expansion of the tax base and the registration of new financiers, and the strengthening of mechanization efforts, in addition to the implementation of a large number of administrative and legislative reforms.

 

The Minister of Finance said that the budget for the new fiscal year (2023/2024) indicates a growth in allocations for support, grants and social benefits by 28.2 percent, compared to 17.1 percent in the budget for the current fiscal year (2022/2023).  

 

This includes: subsidizing food commodities at an annual growth rate of about 20 percent, subsidizing petroleum products at a growth rate of 24 percent, subsidizing exports at 462.5 percent, health insurance and medicines at an annual growth rate of 50.4 percent, and subsidizing housing (low-income and social housing) at an annual growth rate of 103.5 percent.  In addition, subsidizing the social security pension at an annual growth rate of 24 percent, as well as contributions to pension funds and medical expenses for citizens.

 

The minister pointed out that the budget for the next fiscal year also includes an annual growth in wage and employee compensation allocations by 14.6 percent.