Egypt’s FY2024/25 budget aims for growth and social support amid economic challenges

CAIRO – 30 June 2024: As Egypt embarks on its fiscal year 2024/25, the government has prepared an ambitious budget exceeding LE 5.5 trillion, marking a significant increase from the previous year's LE 3.4 trillion. This budget underscores Egypt's dual focus on stimulating economic activity while bolstering social welfare amidst global economic uncertainties.

 

Fiscal Overview and Goals

 

In the fiscal year 2023/24, Egypt prioritized fiscal discipline with a targeted deficit of 4 percent of GDP. Building on this foundation, the FY 2024/25 budget aims to generate revenues totaling LE 2.6 trillion, a 36 percent increase driven by enhanced tax collection efforts. Expenditures are projected to rise by 29 percent to LE 3.9 trillion, reflecting substantial investments across various sectors crucial for sustainable development.

 

Emphasis on Social Spending

 

The FY 2024/25 budget allocates LE 636 billion towards subsidies, grants, and social benefits. This significant commitment includes support for essential commodities like food and fuel, aimed at mitigating the impact of global inflation on Egyptian households. Moreover, increased allocations for health and education underscore Egypt's dedication to enhancing human capital and social well-being.

 

Challenges and Opportunities

 

Despite the expansive budget, Egypt faces the challenge of reducing the deficit to 7.3 percent of GDP in the medium term, a task necessitating a careful balance between economic growth initiatives and social expenditure. The government's strategy includes capping public investments at LE 1 trillion to manage fiscal sustainability effectively.

 

Debt Reduction Strategy

 

In tandem with its fiscal goals, Egypt is actively pursuing a long-term debt management strategy. The Ministry of Finance aims to decrease the debt-to-GDP ratio to below 80 percent by June 2027, underscoring a commitment to fiscal prudence and sustainable economic growth. For the first time, Egypt has set a debt ceiling of LE 15.1 trillion for the upcoming fiscal year, signaling a proactive approach to managing overall government debt.