Key targets of Egypt’s FY2024/2025 budget plan

The program has recently been raised from $3 billion to $8 billion to help the country rebalance its economy amid ongoing global and regional tensions.

The FY2024/2025 budget is based on oil prices of $82 per barrel, up from $80 per barrel in the current FY2023/2024.

Hereunder are the key objectives of the budget plan submitted to the legislature for FY2024/2025, which begins in July.

• Egypt targets a real GDP growth of four percent, up from an estimated 4.1 percent in the current FY2023/2024. The targeted rate exceeds the rate attained in both FY2022/2023 (3.8 percent) and FY2020/2021 (3.3 percent) but remains below FY 2022/2021 (6.6 percent), which was the highest in four fiscal years.

In the first projections announced after completing the first and second reviews of the loan deal, the IMF kept in April its projections for Egypt’s real GDP growth in 2024 at three percent, compared to January projections, declining by 0.8 percent compared to the estimation of 2023.

• The government aims to bring inflation down from the current level of more than 33 percent to 18.1 percent, which is higher than the target of the current FY2023/2024 (16 percent). These figures show that the CBE is likely to fail in terms of fulfilling the target it sets for inflation of seven percent (±2 percent) in the fourth quarter of 2024.

Egypt’s inflation has been in the double digits since the eruption of the Russian war in Ukraine. In FY2022/2023, Egypt’s inflation soared to 23.4 percent, up from 8.1 percent in FY2021/2022 and 6.7 percent in FY 2020/2021.

In April, the IMF projected Egypt’s inflation will remain high over the short term due to the local currency depreciation and the monetary policy tightening, reaching its peak of 32.5 percent in 2024 before shrinking to 25.7 percent in 2025.

• Egypt targets a 3.2 percent budget surplus in FY2024/2025. This rate surpasses the estimated rate for the current FY2023/2024 of 2.5 percent. The target of the current fiscal year, if attained, would be the highest since FY2020/2021.

• Meanwhile, the government raised its projection for the budget overall deficit to 7.2 percent (approximately EGP 1.2 trillion) in the upcoming FY2024/2025, up from 6.9 percent estimated in the current FY2023/2024, and the highest in four fiscal years.

• The general revenues target has been raised in FY2024/2025 to approximately EGP 2.6 trillion, with a growth of 22.5 percent, compared to EGP 2.1 trillion estimated for the current FY2023/2024.

Tax revenues are set to grow by 32.1 percent in the upcoming FY2024/2025 to post over EGP 2 trillion, up from an estimated EGP 1.5 trillion in the current FY2023/2024. The target for the next fiscal year, if achieved, would be the highest in almost seven years.

• Non-tax revenues are expected to grow by 60 percent in the upcoming FY2024/2025, compared to the current fiscal year, to post EGP 600 billion.

• Expenditures in the FY2024/2025 are expected to increase by 29 percent from FY2023/2024 to about EGP 3.9 billion.

• The revenues of the budget of the public government are set at EGP 5.2 trillion vs expenditure of EGP 6.6 trillion, with a deficit rate of 30 percent.

• The government plans to implement a strategy to bring down debt to 80 percent of the country’s GDP in 2027. In the current FY2023/2024, the overall debt is estimated at 96 percent of the GDP.

The IMF expects Egypt’s overall debt to remain high in FY2023/2023, before declining to below 83 percent in the upcoming fiscal year.