The Egyptian Ministry of Finance has revised its projections for the budget deficit in the current fiscal year 2023/2024, ending in June, indicating an expected increase to 7.6% of gross domestic product (GDP), up from the previous estimate of 7%.
The ministry also adjusted its forecasts for general revenues downward, anticipating a decrease of approximately EGP 153.6 billion. This revision brings the total general revenues to EGP 1.98 trillion, compared to the originally targeted EGP 2.14 trillion.
The decrease in general revenues stems from reduced expectations for resources and other capital sources for investment financing, which have been revised to EGP 74.4 billion from the initial projection of EGP 124.4 billion.
On the flip side, expenditures are projected to surpass the initial target, totaling slightly over EGP 3 trillion as opposed to the initial goal of EGP 2.99 trillion. This upward adjustment is primarily attributed to increased debt expenses, now standing at EGP 1.3 trillion after the revision, up from the previous estimate of EGP 1.2 trillion.
During his speech at the 8th Forum for Public Finance in Arab Countries in Dubai, held on the sidelines of the 2024 World Government Summit, Minister of Finance Mohamed Maait anticipated a reduction in the overall state budget deficit to 5% of GDP by June 2027, compared to a 6% deficit recorded in late FY2022/2023.
Maait highlighted improving investor perception of Egypt’s economic future in international markets, attributing it to the government’s flexible policies and structural reforms aimed at attracting more investment flows. Additionally, he noted a 50% decrease in the required yield on Egyptian bonds in international markets and a decrease in the cost of insuring them.
Earlier this month, the International Monetary Fund (IMF) concluded its mission visit, extended from January 17 to February 1, aimed at discussions to finalize the first and second reviews of Egypt’s ongoing reform program supported by the IMF’s Extended Fund Facility (EFF) with a total loan amount of $3 billion.
The program primarily targets the country’s budget imbalances stemming from global and regional tensions, with discussions also indicating the possibility of an additional financing package to shield Egypt against external shocks, with estimations suggesting an extension of up to $12 billion to the struggling economy.
Vladkova Hollar, the IMF’s mission team chief, stated, “To this end, the IMF team and the Egyptian authorities have agreed on the main policy elements of the program. The authorities expressed a strong commitment to act promptly on all critical aspects of Egypt’s economic reform program.”
Moreover, both the IMF team and the Egyptian authorities emphasized the critical importance of bolstering social spending to safeguard vulnerable groups, ensuring adequate living conditions for low and middle-income households significantly affected by rising prices.
During the World Governments’ Summit 2024 in Dubai, Kristalina Georgieva, Managing Director of the IMF, announced that the fund is in the final stages of completing discussions, with an official announcement expected within a few weeks.