Economy

Egypt’s ambitious budget makes private sector a priority

March 28, 2024, 8:32 AM

A man waits for customers at his dates shop in Cairo. The Egyptian government says it will increase tax revenues by 30 percent 'without burdening citizens'

2024-25 budget approved by cabinet
50% rise in private sector investment
Overall growth set at 4.2%

Egypt’s budget for the financial year 2024-25 includes ambitious targets of 4.2 percent growth, a 50 percent increase in private sector investment and a primary surplus of 3.5 percent.

The budget was approved in a cabinet meeting on Wednesday and will be sent to the House of Representatives by the end of the month.

It projects a 36 percent increase in the state’s general budget revenue to EGP2.6 trillion ($60.6 billion) and a 29 percent increase in expenditures to reach EGP3.9 trillion.

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The budget also included projections for total government revenue and expenditure for the first time, including economic bodies not listed in the general budget such as the Suez Canal Authority and New Urban Communities Authority.

Under this broader definition, revenues should reach EGP5 trillion, with expenditures of EGP6.4 trillion.

Finance minister Mohamed Maait, announcing the budget, told the cabinet that it would increase non-tax revenues by 60 percent and tax revenues by 30 percent “without burdening citizens or investors”.

Maait said that this would be achieved by widening the tax base and integrating more of the informal economy through electronic tax systems.

The ministry would also work towards reducing the budget deficit to 6 percent of GDP, Maait announced. It is also targeting a reduction of the debt-to-GDP ratio to 80 percent by July 2027.

Figures released by the Central Bank of Egypt in December showed the country is expected to spend $27 billion (45 percent of projected general budget revenues) on servicing external debt in the coming financial year.

Maait also announced a ceiling for state investments of EGP1 trillion “to make room for the private sector in a way consistent with the state’s efforts to increase the contributions of this important sector to economic development activity.”

The budget for subsidies and social support is projected to increase 20 percent to EGP636 billion, from EGP530 billion last year. The budget also includes a 30 percent increase in health and education spending.

During the past two months the Egyptian pound has fallen 35 percent against the dollar, to 47.2. The country has negotiated financing deals unlocking a potential $58 billion in loans, grants and investments over the next three years.