Egypt's FY 2023/24 budget: Key points at a glance

Ahram Online , Friday 30 Jun 2023

Egypt's new budget for FY 2023/24 takes effect on 1 July, with higher revenues and expenditures forecasted by the government.

Egypt
People walk past a fruit seller s stall in the Azhar district of Egypt s capital Cairo on January 16, 2023. AFP

 

Key figures 

- The government plans to increase revenues to EGP 2.142 trillion in FY 2023/24, a 41 percent rise from the expected EGP 1.518 trillion in the current FY 2022/23.

- Projected expenses for FY 2023/24 are EGP 2.99 trillion, a 33.8 percent increase from FY 2022/23.

- The budget deficit is projected to be EGP 824.4 billion, accounting for 7 percent of the GDP, slightly higher than the 6.4 percent estimated in FY 2022/23.

- The government aims for a primary surplus of EGP 295.6 billion in FY 2024/23, equivalent to 2.5 percent of the GDP, which excludes debt interest payments.

- The government expects the average annual inflation rate to decrease from 19.6 percent in the current FY to 16 percent in FY 2023/24.

- The annual core inflation rate increased from 38.6 percent in April to 40.3 percent in May.

Subsidies 

The FY 2023/24 budget allocates EGP 529.7 billion to subsidies, a 23.6 percent increase from FY 2022/23.

- The largest allocation in the subsidies, EGP 202 billion, goes to pensions, a 38 percent increase from last year.

- Food subsidies, mainly for wheat, account for EGP 127.7 billion, up from EGP 90 billion in FY 2022/23. The government allocated EGP 1,000 per ardeb for local procurement, but the amount is expected to increase significantly due to global price hikes. Last year, the government raised the procurement price from EGP 800 to EGP 1500 per ardeb to meet rising global prices.

- Fuel and electricity subsidies increased to EGP 119.4 billion, more than double the previous year, despite a global drop in oil prices. The new FY budget estimates an average oil barrel price of $80, down from $94 in FY 2022/23. The increase is due to the depreciation of the Egyptian pound, which is trading at nearly half its value from a year ago at nearly EGP 31. In 2023, the government raised fuel and diesel prices by 15 percent.

Education and healthcare

Healthcare receives EGP 397 billion (13.2 percent of expenses), an EGP 92.4 billion increase from last year.

Pre-college and college education allocations increased by 24.3 percent to EGP 591.9 billion.

Wages 

Wages and compensations receive EGP 470 billion, a 14.6 percent (EGP 60 billion) increase from last year and account for 15.7 percent of the government's expenses in FY 2023/24. The increase is due to the implementation of a higher minimum wage of EGP 3,500 and new incentives for state employees introduced in April.

Debt 

- The government aims to reduce gross debt from 96 percent of the GDP by the end of FY 2022/23 to 91.3 percent of the GDP in FY 2023/24.

- Egypt's debt interests for FY 2023/24 are EGP 1.120 trillion, a 44.5 percent increase from FY 2022/23. Internal debt interests account for EGP 967.5 billion, while external debt interests are expected to be EGP 152.6 billion.

- Egypt's external debt totalled $162.9 billion as of December 2022, according to the latest data from the Central Bank of Egypt.

Revenues 

- Tax revenues are projected to increase over 30 percent in FY 2023/24 to approximately EGP 1.53 trillion from public taxes, VAT, and customs.

- Non-tax revenues are expected to reach EGP 610 billion, including EGP 65.8 billion from funds and special accounts, EGP 50.8 billion from the Suez Canal Authority, EGP 30.7 billion from service fees, and EGP 14.5 billion from state-affiliated economic bodies across sectors such as the Egyptian National Railways, the General Authority For Supply Commodities, the Public Transport Authorities, and the Grand Egyptian Museum.

- The government anticipates collecting EGP 2.5 billion in penalty fines. 

Exchange rate

The Egyptian pound has depreciated 50 percent against the dollar since March 2022, with the official exchange rate at around EGP 31 per dollar and the parallel market exchange rate at EGP 35-40 per dollar.

President Abdel-Fattah El-Sisi has rejected any further depreciation of the exchange rate if it poses a threat to Egypt's national security, despite pressure from the IMF to adopt a more flexible exchange rate as part of the economic reform programme.

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