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Egyptian cabinet greenlights $135.39 billion budget for 2024/2025 fiscal year

The government plans to use half of the revenue from asset sales to directly reduce its debt burden.

Egyptian cabinet greenlights $135.39 billion budget for 2024/2025 fiscal year
[Source photo: Krishna Prasad/Fast Company Middle East]

Egypt is grappling with a challenging balancing act due to a shortage of foreign currency and high debt levels. While a recently approved record budget emphasizes social spending, there are concerns about whether it can effectively address deficits and foster economic growth.

The Egyptian cabinet has approved a record budget of 6.4 trillion Egyptian pounds ($135.39 billion) for the 2024/25 fiscal year. This budget emphasizes social protection programs, allocating $13.4 billion to such initiatives, all while the government aims to restrain spending and decrease the national debt.

Egypt is confronted with a complex economic situation. Dependent on imports for fundamental needs such as food and fuel, the nation has been contending with a scarcity of foreign currency and substantial budget deficits.

To tackle these challenges, the cabinet has, for the first time, imposed a cap of one trillion pounds ($21 billion) on public investment spending. The objective is to reduce the debt-to-GDP ratio to 80% by 2027.

While prioritizing fiscal consolidation, the budget reserves substantial resources for social programs. This encompasses $3 billion for food subsidies and $3.2 billion for petroleum product subsidies, guaranteeing that essential goods remain affordable for millions of Egyptians.

Moreover, the government intends to allocate half of the revenue from asset sales directly to reduce its debt burden. This corresponds with Egypt’s goal set in 2022 to attract $10 billion annually through private investment in state-owned assets.

The budget reflects the government’s optimism regarding Egypt’s economic prospects, projecting a preliminary GDP surplus of 3.5% and a growth rate of 4.2% for the upcoming fiscal year.

This confidence is partly fueled by anticipated foreign currency inflows surpassing $20 billion, boosted by a recent $8 billion agreement with the IMF. Finance Minister Mohamed Maait anticipates these developments will help alleviate the currency shortage.

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