This is the case with Egypt’s new, 2026-2027 budget, which will be officially presented to parliament next week.
The new budget was finalised just a few days before the eruption of the Iran war on 28 February, which had begun exerting pressure on the state’s foreign exchange resources and local finances. Recent developments show that the Egyptian pound has weakened against the US dollar, and inflation surged to 15.2 per cent in March, up from 13.4 in February.
In light of all this, the Finance Ministry had no choice but to prepare a flexible budget capable of absorbing the economic and financial shocks triggered by the Iran war and the ongoing global economic meltdown. Prime Minister Mostafa Madbouli was correct in describing the 2026-2027 budget as a belt-tightening one aimed at containing the spillovers of regional and international conflicts, rationing consumption and reducing debt.
At a press conference on Saturday, Finance Minister Ahmed Kouchouk was also clear in stating that the repercussions of the Iran war have made it difficult to prepare the new budget. “The eruption of the Iran war on 28 February led us to introduce changes to the budget at the last moment, before it could be submitted to parliament before the end of March, in line with the constitutional stipulation,” Kouchouk said.
This war, he went on to explain, has hit energy markets, supply chains, trade, financial costs and growth expectations. For example, it has resulted in an increase in Egypt’s monthly natural gas import bill. The day before the outbreak of the war, the natural gas import bill was $560 million. Today, it has reached $1.65 billion, an increase of $1.1 billion per month. This will exert huge pressure on the state budget.
As a result, Kouchouk indicated, the new budget will have to be flexible, making the 2026-2027 one a draft subject to constant change in response to regional tensions. “The most difficult task of this budget will be to contain the negative effects of regional conflicts as much as possible, while rationing public spending and enhancing public revenues at the same time,” Kouchouk said.
This requires that the government should continue to monitor the spillovers of regional tensions, so that the new budget can act swiftly and efficiently to protect the stability of the Egyptian economy and safeguard vulnerable classes.
A few days after the outbreak of the Iran war on 28 February, the government decided to raise fuel prices. It also decided to adopt a number of austerity measures such as postponing implementing some major energy-intensive government projects, especially of diesel and petrol, for at least two months.
In preparing the new budget, however, the government should make it clear that the vulnerable classes should not be the ones to bear the brunt of austerity and belt-tightening measures. The government should be aware that vulnerable classes, including poor and limited-income ones, are the ones who paid the price of all previous crises such as the coronavirus, the Ukraine war, and the Gaza war.
So it is a positive development that Kouchouk announced that the new budget will include a 21 per cent increase in social welfare spending, bringing it to a total of LE832.3 billion, to protect vulnerable people from economic challenges and the risks arising from regional conflicts. Figures show a 10 per cent increase in the money allocated to ration card subsidies, for example, bringing it to a total of LE175.3 billion. This will help more than 60 million citizens receive subsidised bread at cheap prices.
“The new budget was also amended at the last moment to set aside the financial reserves necessary for addressing the difficult economic repercussions that might arise from regional tensions, including the possibility of the eruption of the Iran war again,” Kouchouk said. He indicated that an amount of LE100 billion will be allocated to increasing state employee salaries, bringing the total allocations in this respect to LE821 billion in the new budget. The budget’s most updated figures also show that public revenues should increase at a faster pace than spending, increasing by 27.6 per cent to reach LE4 trillion and up from LE3.1 trillion under the current budget. Expenditures are expected to rise at a slower rate of 13.2 per cent to hit LE5.1 trillion, up from LE 4.9 trillion from the year before.
It remains to be seen how parliament’s discussion of the new budget will go over the next month and how it will be able to stand up to the regional and local challenges facing the Egyptian economy.
* A version of this article appears in print in the 16 April, 2026 edition of Al-Ahram Weekly
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