File Photo: Minister of Finance Mohamed Maait. Al-Ahram
During March, Maait stated that Egypt's real GDP growth is expected to reach 4.2% by the end of the current FY2022/2023.
Maait noted that the government aims to achieve a primary surplus of 2.5% of GDP and estimated inflation to be around 16% in FY2023/24. On the revenue front, he projected a 38.4% increase in revenues, with tax revenues expected to rise by 28% through expanding the tax base, registering new taxpayers, and applying legislative and administrative amendments.
In line with its IMF loan program, the government has pledged to implement new tax-related measures in FY2023/24, targeting an increase of 0.3% in the tax-to-GDP ratio.
The FY2023/24 budget also implies a 28% increase in subsidies allocations, including a 24% rise in fuel subsidies, to support exports. Fuel subsidies rose to EGP 66 billion in the first half of the current FY, exceeding the government's target of EGP 28 billion for the entire fiscal year, driven mainly by soaring oil prices globally and the repercussions of the war in Ukraine.
Although Maait did not specify the targeted budget deficit for FY2023/24, the government estimated it to be at 5% in December. Egypt's budget deficit rose to 4% of GDP during the first half of FY2022/23, driven by a 19.7% increase in expenditure versus a 14.6% rise in revenues.
Egypt is currently engaged in an IMF Extended Fund Facility program, which allows it to receive a $3 billion loan over four years. The program ends by FY2025/2026, and under it, Egypt committed to entirely abandoning fuel subsidies, adopting flexible foreign exchange and interest rate regimes, and bringing inflation down to 7% over the course of the program.
The Monetary Policy Committee of the Central Bank of Egypt will convene on Thursday to review key interest rates in light of recent inflation readings that showed an acceleration to 31.9% for headline inflation and over 40% for core inflation.