Egypt’s 2025-26 budget received cabinet approval on 26 March and will be presented to MPs on Sunday.
According to Mustafa Salem, deputy chairman of parliament’s Budget Committee, the government submitted the draft budget to the House of Representatives before 1 April, the deadline set by the constitution. On Sunday, Finance Minister Ahmed Kouchok and Planning Minister Rania Al-Mashat will deliver two statements on the new budget and development plan for fiscal year 2025-26 before the House of Representatives, after which, said Salem, “the draft budget and development plan will be referred to the House’s Budget Committee and other relevant parliamentary committees to be discussed in detail in the presence of cabinet ministers.”
Salem told Al-Ahram Weekly that discussion of the new budget comes against the backdropofsevere financial headwinds caused byUS President Donald Trump’s new tariffs, the Russia-Ukraine war, and the conflict in Gaza which have negatively affected Egypt’s receipts from Suez Canal shipping and food and energy prices.
“The Finance Ministry had no choice but to prepare a budget capable of absorbing the economic shocks triggered by the ongoing global economic meltdown,” said Salem.
In a press conference on 26 March, Prime Minister Mustafa Madbouli said that despite the challenges Egypt faces, economic indicators confirm the country is moving on the right track.
“The national economy achieved positive results in the second quarter of the current fiscal year and the upward trend in growth rates will reach 4.5 per cent next year despite global and regional challenges,” said Madbouli.
Kouchoksaid that monetary and fiscal tightening, realising social justice, and stimulating economic growth are among the key objectives of the new budget.
Revenues are expected to increase by 19 per cent to reach LE3.1 trillion ($61 billion) in the new budget,and expenditure to increase 18 per cent to reach LE4.6 trillion ($91 billion), said Kouchok, “meaningthere will be an expected budget deficit of LE1.5 trillion [$29.6 billion].”
Most of the increase in revenues will come from taxes which are expected to hit LE2.6 trillion, up from LE2.02 trillion in FY 2024-25, without any new taxes being imposed.
Kouchok also said that the budget aims to reduce public debt to 82.9 per cent of GDP and is targeting a primary surplus of LE795 billion, orfour per cent of GDP, in the next fiscal year, compared to 3.5 per cent in 2024-25. The increase will come through reforms in taxes which make up 80 per cent of total government revenues.
He noted that work to improve living standards by striking a balance between fiscal discipline and inflation will continue. To ease economic pressures on the most vulnerable classes, the new budget earmarks LE732.6 billion for subsidies, grants and social benefits, a 15.2 per cent increase.
Salem revealed subsidies to ration cards will increase to LE160 billion, up from LE134 billion in FY 2024-25, while subsidies on fuel products will decrease to LE75.3 billion, down from LE154.4 billion last year.
“The decrease in fuel subsidies aligns with the economic reform agreement with the IMF and Prime Minister Mustafa Madbouli’s recent announcement that the government is aiming to cut all fuel subsidies by the end of 2025,” said Salem. The majority of fuel subsidies in the new budget will go to diesel and Mazut which tend to be used by poorer classes.
The government’s salary bill will increase from LE575 billion to LE679.1 billion, or 18.1 per cent, and more than LE54 billion will be allocated to the Takaful and Karama social programmes, up from LE40 billion in last year’s budget.
The package of wage and pension hikes is expected to take effect on 1 July — the beginning of the fiscal year. Civil servants and workers at state-owned enterprises will see salary increases and a minimum wage raise to LE7,000, and pensions will increase by 15 per cent.
Kouchoksaid that in preparing the new budget, the Finance Ministry was keen to meet constitutional obligations on education, health, and scientific research:“The constitution stipulates that the government spend three per cent of GDP on health, four per cent on education, and three per cent on scientific research, whichthe new budget willdo.”
Kouchok said LE22 billion has been allocated to medicines, LE12.4 billion for raw materials, LE11 billion for medical supplies, LE2.8 billion for medical equipment maintenance, LE5 billion for therapeutic medicines, LE15.1 billion for state-funded treatment for low-income citizens without insurance coverage, and LE5.9 billion to expand health insurance.
According to Salem, the budget also allocates LE78.1 billion to support productive, export-oriented and tourism activities of which LE8.3 billion isearmarked to support the tourism sector, LE5 billion to support priority industries, and LE3-5 billion for cash incentives to medium and small-scale enterprises.
Al-Mashat said Egypt’s new socioeconomic development plan targets economic growth of between four and 4.5 per cent in 2025-26 and places a ceiling of LE1 trillion on government investments to allow the private sector to increase its contribution to the national economy to 65 per cent and create a million new jobs annually.
Al-Mashatalso revealed that inFY 2025-26, the pre-university education sector aims to construct 20,000 classrooms and upgrade 1,500 schools, and highlighted the development plan’s focus on implementing the second phase of the universal health insurance system and building 15 new hospitals.
* A version of this article appears in print in the 10 April, 2025 edition of Al-Ahram Weekly
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