Egypt's economy can withstand international crises and attract investments: Ministers

Gamal Essam El-Din , Tuesday 9 May 2023

Minister of Finance Mohamed Maait and Minister of Planning and Economic Development Hala El-Said delivered two statements on Tuesday before parliament on the draft FY2023/24 budget and development plan.

File Photo: Egyptian parliament.


"The FY2023/24 budget will continue to adopt measures to mitigate the impact of soaring inflation on vulnerable classes, achieve higher economic growth rates and attract investments," said Maait, indicating that "in this respect, the FY2023/24 budget will increase spending on social protection programs by 48.8 percent (EGP 104 billion) to reach a total EGP 530 billion, up from EGP 426 billion in the current FY2022-2023."

"Within the same context, the new budget has allocated EGP 247 billion to food and fuel subsidies," said Maait, pointing out that "we have allocated EGP 128 billion to ration card subsidies, up 42 percent from EGP 90 billion in the current fiscal year, and EGP 119 billion to fuel subsidies," said Maait.

At the same time, Maait said "salaries of state employees will increase by 17.5 percent from EGP 60 billion to reach EGP 470 billion, up from EGP 410 billion in the current FY2022-2023."

"We hope that the above two measures will help vulnerable classes bear the high cost of living and inflation rates, which we hope to drop to 16 percent by the end of the FY2023/24," said Maait.

Maait said he is confident that the Egyptian economy will stand solid in the face of all challenges due to bold economic reforms and a wise and forceful political leadership.

"To help meet social obligations, the budget targets a 42.2 percent increase in revenues to reach EGP 2.1 trillion, up from EGP 1.5 trillion in the current FY2022-2023," said Maait

"The increase in revenues will come from a targeted 31 percent growth in tax receipts, the government controlling the public debt and economic authorities achieving a growth by 75 percent in profits," said Maait, indicating that "tax receipts are targeted to rise to EGP 1.5 billion, up from EGP 1.2 billion in the current FY2022-2023."

"This represents a growth by 31 percent (EGP 300 billion) in tax receipts and this is not the result of imposing a new tax but it is rather the result of the Tax Authority automating services, introducing e-bills and merging informal businesses into the national economy," said Maait

The budget report indicated that profits generated by 59 economic authorities increased to EGP 610 billion, up from EGP 348 billion in the current FY2022-2023 budget.

"This increase reflects a remarkable improvement in the financial performance of these authorities whose total number will increase to 61," said the report.

"The more the government is able to generate greater revenues, the more it is able to achieve higher growth rates, meet social targets and cover the constitutional obligation of spending 10 percent of GDP on the education and health sectors," said the report.

The budget report said imports of oil will be based on an average price of $85 per barrel for the FY2023/24.

"But please note that the $85 price is just an initial one as this price could change and we estimate that just a one dollar increase in oil prices will cost the state budget EGP 3 billion," said the report, also expecting that "a one percent hike in interest rates will cost the budget EGP 33 billion."

The budget also stipulates imports of wheat will be based on an initial average price of $350 per ton for the FY2023/24, up from $330 per ton in the current FY2022/23 budget.

On the other hand, Maait said the government aims in the new budget to achieve the three objectives of the IMF economic reform programme: fully adopting a flexible exchange rate system, doubling the role of the private sector in the national economy by implementing the state ownership policy document and speeding up the privatisation program.

For her part, Minister El-Said said the new socioeconomic development plan targets economic growth of 4.1 percent for the FY2023/24.

"Though this rate is less than the five percent earlier expected under normal conditions, it is anyway higher than the 3.8 percent and the 2.8 percent expected at the international economy level," said El-Said, estimating that "Egypt's GDP will reach EGP 11.84 trillion in FY2024/23, up from EGP 9.8 trillion in FY2022/23.

"To achieve the targeted growth rate of 4.1 percent, allocations to public investments are expected to reach a total EGP 1.8 trillion in the new FY2023/24, up from EGP 1.32 trillion and by 36 percent."

Maait and El-Said's statements were referred to parliament's Budget Committee to be discussed over one month, after which it will be up for a debate and vote in plenary sessions in the House of Representatives and the Senate.

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