Government postpones costly projects after local currency depreciation

The Egyptian government issued on Monday 11 new decisions aimed at curbing state spending, including halting costly new projects, as the Egyptian pound struggles against foreign currencies.

The measures, detailed in the government’s official gazette, include stopping spending on new projects that need US dollars and ordering state entities to get approval from the Finance Ministry and the Central Bank before allocating foreign currency.

The steps come as Egypt suffers a shortage in foreign funding in the aftermath of Russia’s invasion of Ukraine. Authorities have devalued the Egyptian pound three times in the past year, eventually securing a $3bn International Monetary Fund loan programme.

The government decree didn’t give further details on what projects might be affected.

The decree also restricts officials from the government and state agencies from non-essential travel without prior approval from the prime minister. It exempts officials from the health sector and state agencies that procure vital commodities as well as the defense and interior ministries.

The decisions also stipulated that the Minister of Finance present a periodic report every two months to the Cabinet on the state’s commitment to these decisions and their results.

The decisions apply to all budgets of the entities included in the state’s general budget (administrative apparatus / local administration, public service bodies and economic public bodies), as of the date of implementation of this decision until the end of the fiscal year 2022/23.