Egypt parliament (Al-Ahram)
According to a Ministry of Finance report, the FY 2022/23 draft budget was restructured to increase allocations to social programmes and subsidies. "This increase comes to protect the poor and limited income classes from the negative economic impact of the war in Ukraine," said the report.
Preliminary figures show that budgetary allocations to subsidies, grants and social protection programmes will be increased from EGP 321.3 billion in the current 2021/22 budget to around EGP 356 billion in the new 2022/23 budget.
Yasser Omar, deputy chairman of the House's Budget Committee, told reporters that "as for subsidies, allocations will be increased from EGP 138.3 billion to EGP 148.7 billion." "Subsidies in the new budget will go to basic commodities, fuels, exports, farmers, upper Egypt development, health insurance, and low-cost housing," said Omar, noting, however, that "the biggest increase will be in subsidies allocated to fuels and basic supply commodities."
According to the draft 2022/23 budget's report, "fuel subsidies come on the top as they will be increased from EGP 18.4 billion to EGP 28.9 billion." As for subsidies for basic supply commodities, they will be increased from EGP 87.2 billion to EGP 90 billion."
Omar cited the budget report as attributing "the significant increase in subsidies to fuels and basic supply commodities to the necessity of covering any expected hikes in prices of global wheat and oil prices."
Egypt is the world's number one importer of wheat, with 50 percent of the country's imports coming from Ukraine and Russia. The current Ukraine-Russia war drove global prices of wheat and oil to skyrocket, exerting huge financial pressure on Egypt's new budget.
As for budgetary allocations to grants, the report said they will be increased from EGP 9.9 billion to EGP 35.6 billion. "Grants, like subsidies, will be also directed to shore up the social safety net and protect poor and limited income classes from any expected high inflation rates," said Omar.
The FY 2022/23 draft budget also states that allocations to social protection programmes will reach EGP 159.7 billion, with most of this amount representing the state's contributions to pension funds and social insurance pensions. "This includes the Takaful and Karama pension which will be increased by EGP three billion to cover an additional number of 500,000 poor families," said Omar.