Following a month of debate, Egypt’s 2026-2027 budget received the approval of the General Committee of the House of Representatives this week pending a final vote next week.
While pro-government MPs affiliated with the Mostaqbal Watan (Nation’s Future), Homat Watan (Protectors of the Nation), the People’s Republic, and the National Front parties gave their thumbs up to the budget, most opposition parties rejected it.
Parliament Speaker Hisham Badawi said the discussion and the voting on the new budget would take place next week. The budget should be passed before 30 June. Regional tensions triggered by the four-month US-Iran war dominated the final discussions.
Finance Minister Ahmed Kouchouk said the Iran war had had repercussions that the new budget aims to mitigate. He pointed to “uncertainty in the markets and disruptions in trade and supply chains,” describing them as major challenges, especially for emerging markets like Egypt.
Kouchouk said the budget aims to gradually reduce the country’s dependence on debt while putting it back on the track of sustainable development.
Revenues in the new budget are projected to reach LE4 trillion, he said, marking a 30 per cent increase on the previous year, while expenditures are expected to hit about LE5.2 billion, up 13.2 per cent.
The budget will be referred to the House again if any external or internal factors cause the government to change the allocations, Kouchock said.
He said that the Finance Ministry intends to submit amendments to the tax law in the coming period, with the objective of providing more facilities and incentives for taxpayers to gain an increase in revenues.
Responding to opposition MPs who had complained that the allocations to the healthcare and education sectors were not sufficient, Kouchouk insisted that these two sectors took priority in the new budget.
“There will be 20 per cent and 30 per cent increases in the education and healthcare budgets, respectively,” he said.
Kouchouk said that one of the main targets of the 2026-2027 budget is trimming external debt by $2 billion annually. At the same time, the government aims to reduce debt-service payments to 35 per cent of expenditures in the medium term.
Budget Committee head Mohamed Suleiman noted that this year’s discussions had taken place against a backdrop of shifting global and regional conditions, marked by escalating trade tensions, policy uncertainty, and the geopolitical repercussions of regional conflicts.
He highlighted their impacts on global trade, particularly in the Red Sea, where declining Suez Canal revenues pose added challenges for Egypt’s economy.
Suleiman reviewed the budget figures, with revenues projected at LE4.214 trillion and expenditures at LE5.226 trillion. He stressed that the plans aim to deliver a primary surplus of five per cent of GDP, the highest in a decade, while cutting the overall deficit to 4.9 per cent, the lowest in the same period.
Targets include 5.4 per cent economic growth, reducing inflation to 9.3 per cent, raising tax revenues to 14.4 per cent of GDP, and lowering the debt-to-GDP ratio by 18 per cent to 78.1 per cent, down from 81.2 per cent expected in 2025-2026 and 86.8 per cent in 2024-2025.
“We can describe this new budget as a debt-targeting budget,” Suleiman said.
Regarding social spending, Suleiman explained that allocations for salaries amounted to LE822.7 billion, while allocations for subsidies and social benefits had reached approximately LE874.8 billion.
He pointed out that the social protection allocations included LE178 billion to subsidise food commodities, an increase of 11 per cent, LE23 billion for medical treatment for poorer and limited-income citizens at the state’s expense, an increase of 53 per cent, LE104 billion to subsidise electricity, an increase of 39 per cent, and LE55 billion for the Takaful and Karama cash subsidy programmes.
But the new budget did not meet with the approval of most opposition parties and prominent independents.
Mohamed Abdel-Alim, parliamentary spokesperson for the liberal-oriented Wafd Party, said he could not approve “a budget mortgaged to creditors”, pointing to the burdens of debt-servicing and interest payments that he said are draining a large part of the state’s financial resources.
Abdel-Alim said that discussion of the budget had shown that around 47 per cent of GDP goes to debt-servicing, with this limiting the government’s ability to direct adequate financial resources to improving the standard of living of citizens and improving public services.
He criticised the government’s reliance on borrowing, claiming that insufficient feasibility studies had been carried out for some projects and questioning the role of regulatory bodies and mechanisms for monitoring public spending and ensuring its efficiency.
“The government needs the will to solve the country’s problems and not remain a hostage to the International Monetary Fund and the World Bank,” he said.
Joining forces with Abdel-Alim, independent MP Ahmed Farghali said he could not vote yes to a budget that aims to serve debt not citizens. The debt was like a “sandbag” tied to the country’s legs, he said.
Abdel-Moneim Imam, head of the Justice (Adl) Party, also announced his rejection of the budget and development plans. He said that the effects of the borrowing policy would extend to nearly 30 years, meaning that future generations will bear the economic burden of today’s loans and debts.
Imam questioned Kouchouk’s assertion that the budget aims to trim external debt by $2 billion annually. “In fact, the external debt is increasing, and the figures show that it increased from $158 billion in 2024 to $165 billion in 2025,” he said, also complaining that a large part of the country’s financial resources goes to debt-servicing.
He said that the government often bears the burden of debt repayments on behalf of borrowers who are unable to meet their obligations, which places an additional burden on the state and puts pressure on the general budget.
Mohamed Mahmoud Sami Al-Imam, parliamentary spokesperson for the Egyptian Socialist Democratic Party, criticised the assumptions on which the budget was built, considering that it does not reflect current economic developments.
He said its targeting was no longer realistic in the light of the Iran war, which has pushed prices higher in most world economies, including Egypt’s.
He praised the Finance Ministry’s efforts in reducing external debt but said that the main problem lies in the rise of domestic debt, especially in the light of higher interest rates.
“The gap between the actual and estimated interest rate could lead to an increase in the cost of public debt by about LE600 billion,” he said, “which adds new burdens to the budget deficit and increases the need for borrowing.”
He also criticised what he described as a “double standard in applying austerity measures” in the new budget. “While some sectors are subject to austerity pressures, others are given a free hand on spending,” he added.
Regarding the development plans set out in the new budget, Al-Imam expressed reservations about their targets.
“The plans target private sector investment worth LE2.2 trillion, which is totally unrealistic,” Al-Imam said.
* A version of this article appears in print in the 18 June, 2026 edition of Al-Ahram Weekly.
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