The Egyptian Cabinet said today, Wednesday, that it had approved the draft budget for the next fiscal year 2023-2024, which includes an increase in subsidies for food commodities by 20% and an increase in subsidies for petroleum products by 24%.
The statement stated that the target growth rate in the budget for the fiscal year that begins in July is 4.1%, instead of 5.5% in the past, while the budget estimates indicate an inflation rate of 16%.
The Minister of Finance, Dr. Mohamed Maait, said that the target growth rate in the budget for the new fiscal year (2023/2024) came in light of the estimates of the Ministry of Planning and Economic Development, the targets of the Central Bank of Egypt, and global price estimates.
Egypt is struggling to contain economic pressures exposed by the consequences of the war in Ukraine, including the high costs of grain and fuel imports.
The Egyptian pound came under pressure again this month despite three sharp devaluations since last March, which lost nearly half of its value against the dollar.
Urban inflation accelerated to its highest level in five and a half years, to 31.9%.
Total revenues are expected to rise by 38.4% and tax revenues to grow by 28%. The draft budget still needs parliamentary approval for approval.
The Minister of Finance stated that in light of the budget estimates, which include targeted reform measures, the primary surplus is expected to reach 2.5% of GDP. It is the highest primary surplus targeted in the framework of efforts to reduce government indebtedness as a percentage of GDP, indicating that the new budget estimated the inflation rate at 16%.
He explained that total revenues in the new budget are expected to grow by 38.4%, while tax revenues are expected to grow by 28%. This is thanks to the expansion of the tax base, the registration of new financiers, the strengthening of mechanization efforts, as well as the implementation of a large number of administrative and legislative reforms.
The budget for the new fiscal year (2023/2024) indicates a growth in allocations for support, grants and social benefits by 28.2%, compared to 17.1% in the budget for the current fiscal year (2022/2023), and this includes: subsidizing food commodities at an annual growth rate of about 20%, and subsidizing materials Petroleum, with a growth rate of 24%.
The budget also includes support for exports at 462.5%, health insurance and medicines at an annual growth of 50.4%, support for housing (low-income and social housing) at an annual growth rate of 103.5%, social security pension at an annual growth rate of 24%, as well as contributions to pension funds and medical expenses for citizens.
The budget for the next fiscal year also includes an annual growth in wage allocations and employee compensation by 14.6%.