Despite global uncertainties, preliminary data suggest that Egypt’s real GDP growth in the fiscal year 2024-25 is on track to surpass the initial target of four per cent, a statement by the Ministry of Planning said on Monday.
According to the statement, the growth is supported by a rebound in private investment, a solid recovery in non-oil manufacturing activity, and strong GDP performance over the first nine months of the fiscal year.
GDP growth accelerated to around 4.8 per cent in the third quarter of fiscal year 2024-25, more than double the rate in the same quarter last year. This pushed average growth for the first nine months of the fiscal year to 4.2 per cent, compared to 2.4 per cent during the same period a year earlier, the statement said.
That growth was driven by a well-performing non-oil manufacturing sector, alongside significant growth in both the tourism and telecommunication sectors.
The good news adds to renewed anticipations that regional tensions will ease, with this also reflecting positively on the economy. Prime Minister Mustafa Madbouli recently told reporters that the government hopes the ceasefire between Iran and Israel will be the beginning of an end to all the conflicts in the region, including the war on Gaza.
Madbouli affirmed that the 12-day war between Iran and Israel has not had a dramatic impact on Egypt’s economy, highlighting its ability to absorb shocks and secure the foreign-currency resources needed to cover imports of essential goods.
He indicated that close coordination between the government and the Central Bank of Egypt (CBE) had led to stabilising prices on the local market during the 12-day war and that there were no food supply bottlenecks.
Egypt’s net foreign reserves reached a record high of $48.5 billion at the end of May, representing an increase from $48.14 billion in April.
The end of hostilities also had a positive impact on the Egyptian pound. Recent figures showed that it strengthened against the US dollar this week. The CBE quoted the average buying rate at LE49.64 and the selling rate at LE49.74, compared to last week’s rates of LE50.74 for buying and LE50.84 for selling.
Also citing a recent international report, Madbouli said Egypt ranked ninth globally in attracting foreign direct investments (FDIs) in 2024, up from 32nd place in previous years. He reiterated the government’s commitment to further improving the investment climate by streamlining licensing procedures and offering greater facilities for both local and foreign investors.
Talaat Al-Sewedy, head of parliament’s Energy Committee, said another piece of good news brought by the ceasefire between Iran and Israel was that global oil prices had dropped 3.8 per cent in one week to reach $68 a barrel, down from $75 a week ago.
“This is good news not only for the government but also for the people,” said Al-Sewedy, explaining that “it is good for the government because it means no additional financial pressures on the state budget, and for the people because it means that there will be no need to raise fuel prices for at least six months.”
He also pointed to the progress in the natural gas supply necessary to cover the country’s energy needs during the hot summer months.
Petroleum Minister Karim Badawi said during a visit to the Ain Sokhna Port on Sunday that Egypt was able to compensate for the suspension of natural gas flows coming from Israel by contracting three Liquefied Natural Gas (LNG) regasification ships, ensuring a stable energy supply for households and industry during the hot summer months.
A Petroleum Ministry source told the media on Monday that following the ceasefire on 24 June Israel had informed Egypt of plans to gradually increase gas flows over the coming days to between 650 and 750 million cubic feet (mcf) per day.
When the military confrontation between Iran and Israel began, there was a complete halt in gas flows from Israel to Egypt for two days after the shutdown of the giant Leviathan Field and the Karish Field.
Flows during the rest of the period were very limited. With the ceasefire in place, Israel’s natural gas exports to Egypt are expected to be back to their pre-war level of 850 mcf/day over the next few months.
Given the positive developments, Madbouli announced this week that the government has restarted gas supplies to several energy-intensive industries, including fertilisers and petrochemicals, after they were temporarily reduced.
If the Iran-Israel war had lasted longer, it would have taken a heavy toll on the country’s finances, he said. Fakhri Al-Fiqi, head of parliament’s Budget Committee, told MPs on Sunday that there was no question that regional geopolitical tensions, particularly the war on Gaza and the Iran-Israel confrontation, had exerted pressure on the state budget in the form of higher domestic and external debt-servicing costs resulting from the depreciation of the Egyptian pound.
According to Al-Fiqi, debt-servicing costs have ballooned to nearly half the state’s total spending — 49.9 per cent in fiscal year 2024-25 compared to 31.9 per cent in 2021-22.
As a result, the House of Representatives approved on Sunday an additional budget allocation of LE85 billion for 2024-25. Finance Minister Ahmed Kouchouk told MPs that proceeds from tax reform initiatives launched by the Finance Ministry to include the informal economy and resolve disputes, which have already generated LE85 billion ($1.8 billion), will be directed towards financing this additional allocation.
In another move aimed to reduce the budget deficit and enhance the resilience of the national economy against external shocks, the House approved on Sunday a set of changes to the value-added tax (VAT) law. Kouchouk said the changes will not impact basic commodities and services, but they will impact the prices of cigarettes, alcoholic beverages, and construction and contracting services.
“These price hikes aim to increase tax revenues amid growing pressure on public finances resulting from geopolitical tensions and wars,” he said. Finance Ministry sources expect that the government will raise LE100 billion from the new tax hikes, also part of the government’s commitments to the International Monetary Fund.
* A version of this article appears in print in the 3 July, 2025 edition of Al-Ahram Weekly
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