Egypt’s cabinet has approved a draft state budget of EGP 4.6 trillion ($91 billion) for the fiscal year beginning in July, aiming to tighten finances under an International Monetary Fund (IMF) program, Reuters reported.
The proposed budget projects an 18% increase in expenditures and a 19% rise in revenues compared to the current fiscal year, with revenues expected to reach EGP 3.1 trillion. This results in a projected deficit of approximately EGP 1.5 trillion ($30 billion).
The increased spending accounts for elevated inflation, which stood at an annual rate of 12.8% in February. Financial reforms under an $8 billion program with the IMF, initiated in March 2024, have helped reduce inflation from a peak of 38% in September 2023.
The new budget targets a primary surplus of EGP 795 billion, equivalent to 4% of GDP, up from the 3.5% initially targeted in the 2024/25 budget. It also aims to lower public debt to 82.9% of GDP from an expected 92% in the current fiscal year.
Allocations for subsidies, grants, and social benefits will increase by 15.2% to EGP 732.6 billion. This includes a 20% rise in subsidies for commodities and bread, totalling EGP 160 billion and EGP 75 billion each for petroleum products and electricity subsidies. An additional EGP 3.5 billion is designated to support natural gas deliveries to households.
The IMF recently approved a $1.2 billion disbursement to Egypt following its fourth review of the financial reform program.
The draft budget now awaits discussion and final approval by Egypt’s Parliament.
