Egypt's Budget Deficit Improves to 2.1% of GDP in Q1 FY2024/2025

CAIRO - 7 November 2024: Egypt’s budget deficit has narrowed to 2.1 percent of GDP in the first quarter (Q1) of fiscal year 2024/2025, down from 3.2 percent during the same period in FY2023/2024, Finance Minister Ahmed Kouchouk announced earlier this week. 

 

The minister made the announcement during a session in the House of Representatives, marking the completion of his "100 days of work" in office. 

 

Kouchouk highlighted that the government has projected a total budget deficit of LE 1.245 trillion for FY2024/2025, equivalent to 7.3 percent of the country’s GDP.

 

Strong Revenue Growth and Economic Highlights

 

Public revenues grew by approximately 40 percent  between July and September 2024, a significant increase driven by a remarkable 45 percent  rise in tax revenues, the highest in over two decades. This growth was achieved without imposing new taxes or additional burdens on taxpayers.

 

The government reported a primary surplus of LE  90 billion for Q1 FY2024/2025, more than four times the surplus from the same period in the previous fiscal year. This was accomplished despite a 60 percent  decline in revenues from the Suez Canal.

 

Minister Kouchouk also emphasized the government's continued commitment to social programs, noting that the Ministry of Finance has supported key initiatives to benefit low-income citizens. The government delivered natural gas to nearly 1.2 million housing units, provided 330,000 social housing units for low-income families, and raised cash assistance for the Takaful and Karama social welfare program to LE 9.6 billion. 

 

Additionally, food subsidies reached LE 26.1 billion in Q1, reflecting a 42.9percent  increase compared to the previous year. Total spending on subsidies and social benefits climbed 39.8percent  to LE 133 billion.

 

Increased Spending on Education and Healthcare

 

The government also boosted spending on essential public services. Education spending grew by 28.4percent , rising to LE  77.5 billion from LE  60.4 billion. Healthcare spending surged by 33 percent , reaching LE  46.5 billion, up from LE  34.9 billion in Q1 of FY2023/2024.

 

Debt Management and Fiscal Targets

 

On debt management, Kouchouk reported significant progress in reducing Egypt’s public debt-to-GDP ratio, which decreased from 96percent  in June 2023 to 89.6percent  in June 2024. The government aims to reduce this ratio further to 85 percent  by the end of FY2024/2025.

 

As part of its $8 billion loan agreement with the International Monetary Fund, Egypt is targeting a reduction in its gross debt-to-GDP ratio to approximately 83 percent  by FY2026/2027. External debt for budgetary sectors also decreased by more than LE 3 billion over the past year, with an additional LE 2 billion reduction targeted by the end of FY2024/2025.

 

Overall, Kouchouk's update highlights a mix of fiscal prudence and strategic investments aimed at both strengthening Egypt’s financial position and supporting economic growth, while continuing to prioritize social welfare and public services.