Hereunder the key targets and projections Egypt aims for in the new fiscal year:

• Aligning public spending with national priorities and structural reforms, with goals of is to enhance economic efficiency, support financial sustainability, and improve service delivery across sectors, while promoting fairness and social development.
• Prioritizing digital transformation and modernize public financial management systems, with a particular focus on automation, monitoring, and transparency.
• The FY2025/2026 budget emphasizes enhancing the role of the private sector in economic development, reducing public debt, and improving spending efficiency.
• Egypt targets a primary surplus of four percent of GDP in FY2025/2026 and aims to reduce the overall budget deficit to 4.5 percent. These fiscal targets reflect the government’s commitment to sound financial management, aligning with national development goals and enhancing confidence among investors and development partners.
• Egypt targets to lower the budget deficit to 7.3 percent of GDP, down from an estimated 7.6 percent reached in the current FY2024/2025.
• Egypt targets a 23 percent growth of total revenues in FY20205/2026, to reach EGP 3.1 trillion, up from an estimated EGP 2.5 trillion seen in current FY2024/2025.
• A 27.7 percent growth is projected in tax revenues in the draft state budget for FY2025/2026, compared to the preliminary estimates of FY2024/2025. This represents a roughly one percent increase as a share of the Egypt’s GDP. The projection is based on the state's commitment to expanding the tax base, modernizing tax administration, and enhancing fiscal sustainability without introducing new taxes.

To achieve this, the budget sets a series of measures, including:

1. Streamlining tax incentives by ensuring they are better targeted and more transparent, while gradually phasing out outdated or inefficient tax exemptions.
2. Tightening control over tax evasion and enhancing the collection process through increased digitization and real-time monitoring systems.
3. Expanding the use of electronic invoicing and other modern tax technologies to improve compliance and revenue forecasting.

Projected Tax Revenue Breakdown

• Income Tax:
  Income tax revenue is expected to grow by 22.9 percent year-on-year, reaching EGP 1.441 trillion. This includes income tax from wages, salaries, and other sources such as treasury bills, bonds, and business profits. This increase is attributed to ongoing efforts to improve tax administration and compliance.
• Value-Added Tax (VAT):
  Revenues from VAT on goods and services are forecasted to rise by 20.8%, reaching EGP 967.9 billion, driven by enhanced electronic tax systems and reduced reliance on manual processing.
• Other Indirect Taxes:
  Revenues from other indirect taxes are projected at EGP 118 billion, up from EGP 80 billion in FY2024/2025. This reflects efforts to update the tax framework, expand electronic systems, and adjust rates to reflect real economic activity.
• Customs Duties:
  Customs revenues are projected to increase by 14.7% to EGP 135.8 billion, reflecting a pickup in trade activity, particularly in imports of both consumer and production inputs, as well as reforms to modernize customs procedures.

Non-Tax Revenues

The government targets improving the efficiency of managing state-owned assets to boost non-tax revenues. This includes optimizing the use of public buildings, government facilities, and dormant assets. Additionally, efforts are underway to reduce reliance on borrowing by enhancing public investment returns and improving the quality of public services.

The Ministry of Finance emphasizes that fiscal policy will not introduce new taxes or increase current rates. Instead, it will prioritize widening the tax base and better utilizing non-tax revenues to reduce the budget deficit and strengthen the state's financial position.

Public Expenditure Priorities

Public spending in the FY2025/2026 draft budget will focus on advancing development goals, particularly in social protection and improving the quality of basic services such as education, healthcare, and infrastructure. The government also plans to support the private sector's role in economic growth by enhancing the investment climate and incentivizing domestic production.

In this respect, the primary expenditure is expected to rise by 19.2 percent, with a projected 18.3 percent increase in basic allocations.

Capital investments in the general government are forecast to grow by 13 percent, reaching EGP 435 billion in FY2025/2026, up from EGP 386 billion in FY2024/2025. This includes investments in infrastructure to facilitate greater private sector participation and stimulate sustainable growth.

Strategic Sectors and Development Goals

The government will prioritize spending on strategic sectors such as energy, agriculture, tourism, and industry. This includes programs to promote food security, localize technology, and increase the share of renewable energy.

In line with youth empowerment and inclusive development strategies, the budget includes funding for vocational training, startup incentives, and employment programs to engage youth in productive economic activities. These all targets are reflected in the following figures:

• The total public investments included in the draft state budget for FY2025/2026 are expected to increase by 12.7 percent compared to the revised estimates for FY2024/2025, bringing the total to EGP 435 billion, up from EGP 386 billion in the current fiscal year’s estimates.
• The government affirmed that the increase in public investments from the state treasury specifically reflects a 25 percent growth, highlighting the state’s continued commitment to boosting government-funded investment spending.
• The government expects the public debt-to-GDP ratio to decline to 90 percent of the gross domestic product (GDP), compared to an average of 81–82 percent in previous fiscal years. This anticipated improvement is attributed to efforts aimed at reducing the cost of domestic public debt.
• The FY2025/2026 budget plan estimates the country’s financial needs at roughly EGP 3.6 trillion, up from EGP 2.8 trillion in the current fiscal year.

Inflation outlook
 

The government aims to reduce inflation to 13.6 percent in FY2025/26, with a longer-term target of 9 percent by FY2028/29. This trajectory indicates that the Central Bank of Egypt’s inflation target for the fourth quarter of 2026 is unlikely to be met before 2028.

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