Egypt parliament to discuss FY 2023/24 ‘flexible’ budget and development plan on Sunday

Gamal Essam El-Din , Saturday 10 Jun 2023

The House of Representatives will start discussing on Sunday the country's budget and socio-economic development plan for the coming FY 2023-2024.

File photo of the Egyptian Parliament (Photo: Khaled Mashaal)

The discussion will continue until Tuesday, after which the budget and plan will be submitted for a final vote.

The parliament's Budget and Plan Committee issued two reports before the discussion. These reports described the FY 2023-24 budget as flexible.  

Furthermore, the reports state that the budget aims to mitigate the impact on vulnerable classes of soaring inflation – triggered by the war in Ukraine – and implement reforms that can achieve fiscal discipline.

Chairman of the Budget Committee, Fakhri El-Fiqi, will kick off the debate by delivering a statement on the main aspects of the budget and plan.

Then, MPs representing political parties and independent members will comment on the budget and plan.

According to Egypt's 2014 constitution, the budget and socio-economic development plan should be ratified by parliament before the end of the fiscal year on 30 June.

Finance Minister Mohamed Maait recently told parliament that spending on social security programmes, grants, and subsidies will increase by 28.2 percent in the new budget, up from 17.1 percent in the current FY 2022-23 budget.

"Allocations for food subsidies will also rise by 20 percent and fuel subsidies by 24 percent," said Maait.

The new budget will raise social spending to EGP 529.7 billion, including EGP 127 billion on ration cards, EGP 119.4 on fuel subsidies, EGP 6 billion on social insurance, and EGP 10.2 billion on low-cost housing.

As for fiscal reform, Maait said the budget and plan target a 4.1 percent economic growth and a budget deficit cut to 6.9 percent of GDP.

“The automation of Tax Authority services will help narrow the budget deficit, increase state revenues, and merge informal businesses into the national economy, hence increasing the number of taxpayers,” he added.

The new budget increases revenues to EGP 1 trillion, 41.2 percent higher than the current budget. Spending will also increase by 44.4 percent, compared to the FY 2022-2023 budget, reaching EGP 3 trillion.

The increase in revenues is attributed to the government’s control of public debt and an expected 28 percent growth in tax receipts, Maait said.

Maait indicated that the preparation of the new budget coincides with the global economic crisis triggered by the Russia-Ukraine war, which exerted tremendous pressure on the public finances of most countries, including Egypt.

For her part, Planning Minister Hala El-Said told the Senate last week that the government’s FY 2023-24 plan was based on EGP 1.65 trillion in investment.

El-Said added that 64 percent of the money (EGP 1.05 trillion) comes from the government and 36 percent (EGP 600 billion) from the private sector.

"The government aims to increase private investments to 50 percent by the end of FY 2025-26 and oversee a reduction in public investment from 71 percent in FY 2021-22 to 50 percent by FY 2025-26," she said.

Moreover, the planning minister said the new socio-economic development plan has three objectives. First, to finish existing investment projects that are more than 70 percent complete. Second, to initiate projects, especially in the health and education sectors, already planned as part of the Decent Life initiative in rural Egypt. Third, to exit projects which the private sector will fund according to the State Ownership Policy Document.

The plan targets economic growth of 4.1 percent – a reduction from the previously projected five percent – in line with revised IMF and World Bank forecasts which expect Egypt’s growth rate to be between four and 4.3 percent from FY 2022-23 to FY 2023-24.

“Though the 4.1 percent growth rate is less than the previously expected five percent, due to the negative economic impacts of the war in Ukraine, it is still higher than that in many other countries,” said El-Said.


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