Egypt’s Total Budget Deficit to Widen to 7.2% of GDP in FY24/25

Doaa A. Moneim, Ahram Online 

Tuesday 23 Apr 2024

Egypt’s total budget deficit for the upcoming FY2024/2025 will widen to EGP 1.2 trillion, equivalent to 7.2 percent of the country’s GDP, up from an estimated EGP 555 billion (or four percent of the GDP) in the current FY2023/2024, the Ministry of Finance said in its budget financial statement on Tuesday.

File Photo: Minister of Finance Mohamed Maait.

According to the financial statement of the FY2024/2025 budget, the government aims to achieve a preliminary surplus of EGP 591.4 billion, equivalent to 3.5 percent of the estimated GDP for the FY2024/2025.

This compares to a preliminary surplus of around EGP 805 billion expected at the end of the current FY2023/2024, representing 5.75% of the GDP.

This takes into account the collection of $12 billion, representing about 50 percent of the $35 billion from the Ras El-Hekma development project for the benefit of the general treasury, which is an exceptional and non-recurring resource, according to the Minister of Finance Mohamed Mait.

The minister stated that the general revenues in the general state budget for the FY2024/2025 is projected to grow by 8.5 percent to EGP 2.6 trillion, representing 15.4 percent of the GDP.

“We aim for tax revenues to grow by about 30.5 percent to reach more than EGP 2 trillion, reflecting the efforts to modernize tax administration, expanding the tax base, and increasing the collection of taxes due on e-commerce, especially global platforms not based in Egypt, as well as international taxes on multinational companies,” Maait explained.

He pointed out that the government aims to collect non-tax revenues from various sources amounting to about EGP 599.6 billion in FY2024/2025.

Reducing debt

Addressing the country’s overall debt, Maait said that the government is working on implementing a specific strategy to more quickly reduce the debt-to-GDP ratio of the general state budget to less than 80 percent by June 2027.

He added that the cabinet has set a debt ceiling for the general state budget in the upcoming FY2024/2025 at EGP 15.1 trillion, equivalent to 88.2 percent of the GDP, compared to 96 percent in the current FY2022/2023. The minister expected Egypt’s debt at 90 percent of GDP by the end of June 2024.

He pointed out that this "ceiling" cannot be exceeded except in national emergencies and cases of necessity with the approval of the president, the cabinet, and the House of Representatives.

The minister clarified that the total expenditures amount to around EGP 6.6 trillion and its revenues reach approximately EGP 5.3 trillion for FY2024/2025, after excluding all the inter-budgetary relations between the general state budget and the budgets of the 59 public economic bodies.

The minister confirmed that the upcoming FY2024/2025 will see an increase in general expenses by approximately 29 percent, reaching EGP 3.87 trillion, which represents 22.6 percent of the projected GDP for the next fiscal year, compared to the expected results by the end of June 2024.

He explained that the constitutional entitlements for health and education have been fulfilled, with healthcare allocations amounting to EGP 496 billion, pre-university education at EGP 565 billion, higher education and universities at EGP 293 billion, and scientific research at EGP 140.1 billion.

The minister pointed out an increase in wage allocations to EGP 575 billion pounds compared to EGP 494 billion pounds to accommodate the recent package for state employees.

Investment allocations will increase to EGP 496 billion, up from EGP 334 billion in the current FY2023/2024.

However, 44 percent of these investments are self-funded, depending on providing their own financing and not affecting the budget deficit, according to the minister, adding that a maximum limit of EGP 1 trillion has been set for general investments for all state agencies and institutions without exception during the next FY2024/2025.