Egypt to impose strict limits on public investments, debt in FY 2024/25: Finance minister

Amr Kandil , Tuesday 19 Mar 2024

Minister of Finance Mohamed Maait said the state is placing a stringent ceiling of EGP 1 trillion on public investments in the upcoming fiscal year 2024/25, while also capping public debt.

Minister of Finance Mohamed Maait speaks during a meeting with leading media professionals. Press photo


During a meeting with media and press professionals on Sunday, Maait provided key insights into the draft state budget for the new fiscal year, set to begin in July.

The purpose of the new investment ceiling is to create more opportunities for the private sector, stated Maait.

He emphasized that all investment projects undertaken by state-owned entities will be subject to this limit.

Meanwhile, the state is adopting a new strategy to sustainably lower public, which cannot be surpassed without the approval of the president, cabinet, and parliament.

A limit will also be placed on guarantees during the coming year to reduce external debt.

Within the coming three years, the state aims to decrease the debt-to-GDP ratio to less than 80 percent.

Moreover, the primary surplus and half of the revenues from the Initial Public Offering (IPO) programme will be employed to reduce government debt and its service burdens.

Cautious’ economic measures

Maait emphasized ongoing measures to reform the economic situation while adopting more sustainable and cautious economic policies that hedge against internal and external shocks.

He noted that the state is keen on achieving a balance between economic recovery measures and financial discipline, while “gradually” compensating citizens for tough inflationary pressure.

The government will remain focused on developing people’s living standards, he added.

The minister said the state is working to restore economic stability for citizens and address inflation with a comprehensive package of more efficient economic policies.

During the coming fiscal year, the state will focus on securing strategic reserves of commodities to meet the basic needs of citizens and increase spending on social protection, Maait added.

Since January, the state has secured the release of $14.5 billion worth of goods stranded at ports, Maait said, emphasizing the state’s continuous efforts to increase commodities available in local markets.

The new draft budget allocates EGP 596 billion for subsidies, including more than EGP 134 billion in food commodity subsidies and over EGP 147 billion in petroleum products subsidies.

The state will also allocate more than EGP 40 million for the social support programme Takaful and Karama (Solidarity and Dignity).

The minister emphasized that health and education continue to be a priority for the president.

Public government budget

Maait highlighted the state’s plans to include the revenues and expenses of dozens of public economic entities in the state budget, echoing his previous remarks about a new “public government budget.”

This government budget aims to clarify the true capabilities of the state’s public finances by reflecting the entire revenues and expenditures of the state and its public bodies.

A total of 40 economic bodies will be added to the state budget in FY2024/25, joined by another 19 during the coming five years, upping the total to 59, Maait said.

Ambitious targets

Maait said the state is working towards “very ambitious targets,” with the primary objective of achieving its largest surplus of 3.5 percent.

Additionally, the state aims to reduce the overall deficit to six percent of the GDP in the medium term.

The new draft budget includes a total public expenditure of EGP 3.9 trillion, while the expected revenue amounts to EGP 2.6 trillion, Maait said.

The state, Maait said, seeks EGP 2 trillion in tax revenue but asserted that no new burdens will be imposed on citizens or investors.

He explained that this goal can be accomplished by maximizing efforts to integrate the informal economy and streamlining tax systems.

Furthermore, the draft budget allocates EGP 23 billion for supporting exports and encouraging investors to expand their exporting activities.

Major strides

He underlined the importance of the recent agreement between Egypt and the International Monetary Fund (IMF) for an expanded $8 billion loan.

He said this deal will catalyse a foreign currency influx totalling over $20 billion from international funding institutions and development partners.

He noted that a recent €7.4 billion funding package presented by the European Union to Egypt will help enhance the country’s economic stability.

Egypt has recently achieved significant foreign currency inflows, including a mega $35 billion deal signed with the United Arab Emirates in February for the development of the Ras El-Hekma area on the North Coast.

This deal, the largest foreign direct investment in the country's history, combined with grants and loans from international institutions, has helped avert a severe shortage of foreign currency required to purchase essential commodities.

In March, Egypt also implemented a long-awaited currency floatation, which has narrowed the gap between the official exchange rate and the parallel market rate.

Prime Minister Mostafa Madbouly has highlighted that recent economic measures, including currency flotation, will contribute to eliminating the parallel market and strengthening the government's efforts to combat inflation.

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