Egypt's 2023-2024 Budget Prioritizes Inflation Control and Economic Growth

Egypt's 2023-24 budget focuses on combating inflation, boosting development, and enhancing the economy, with key priorities on education, health, and employment. The government aims to reduce debt and diversify financing sources to promote long-term stability and prosperity.

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Hadeel Hashem
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Egypt's 2023-2024 Budget Prioritizes Inflation Control and Economic Growth

Egypt's 2023-2024 Budget Prioritizes Inflation Control and Economic Growth

Egypt's government has unveiled its budget for the 2023-2024 fiscal year, with a focus on combating inflation, boosting development, and enhancing the overall economy. The budget, which has a GDP of 17.3 trillion pounds and targets a growth rate of 4.2%, places key priorities on education, health, and employment.

The budget allocates over LE3.4 trillion toward debt servicing, accounting for 62.1% of the total general budget. This includes loan repayments and interest payments. Other significant allocations are subsidies, grants and social benefits at 11.5%, wages at 10.4%, and investments at 8.9%. The government aims to reduce the total debt to 88.2% of GDP in the next fiscal year, setting a ceiling of LE15.1 trillion in debt. Efforts will be made to reduce the rate of increasing interest payments by diversifying financing sources.

Why this matters: Egypt's budget priorities reflect the government's commitment to addressing economic challenges and promoting sustainable growth. The focus on controlling inflation, reducing debt, and investing in key sectors like education and health is crucial for the country's long-term stability and prosperity.

Egypt has reiterated its commitments to the IMF under its Extended Fund Facility (EFF) program, which supports the country's economic and structural reforms through 2026. The reforms focus on shifting to a flexible exchange rate system, tightening monetary and fiscal policy, expanding social protection programs, and allowing a greater role for the private sector. The country's economic situation has begun to improve, with a primary surplus of 3% of GDP and tax revenue growth of over 41%. The government aims to reduce public debt to below 80% of GDP by 2027 and diversify its financing sources.

Egypt is also working to attract more investment inflows, with a recent $11 billion deal with the UAE's ADQ to develop the Ras Al Hekma area. The country is collaborating with multilateral development banks to mobilize funds for large projects and expand the scope of development. The trade balance deficit declined by 11.158 billion in 2023 to 36.908 billion, with exports exceeding 2022 records at 35.63 billion and imports decreasing 14% to 72.54 billion. Top export markets were Türkiye, Saudi Arabia, the UAE, Italy, and the US.

Despite global uncertainties and challenges, Egypt's Financial Regulatory Authority (FRA) subsidiaries provided 69.5 billion Egyptian pounds in funding in January 2024, reflecting a robust economic environment. The funds were allocated across various sectors, including stock issuances (40.5 billion pounds), leasing contracts (8.1 billion pounds), and financing for medium, small, and micro projects (7.1 billion pounds). The insurance

Key Takeaways

  • Egypt's 2023-24 budget focuses on combating inflation, boosting development, and enhancing economy.
  • Budget allocates over 62% to debt servicing, 11.5% to subsidies, grants, and social benefits.
  • Egypt aims to reduce total debt to 88.2% of GDP and diversify financing sources.
  • Egypt's economic reforms under IMF program include flexible exchange rate, tighter policies, and private sector role.
  • Egypt attracted $11 billion UAE investment, reduced trade deficit, and saw robust financial activity in 2024.