Finance Minister Mohamed Maait said that the state is using all its resources to achieve economic recovery, stability, and inflation control as soon as possible.
He reported that the state’s general budget in the past eight months showed balanced performance, with an initial surplus of EGP 193bn, up from EGP 41.8bn, a growth rate of more than fourfold compared to the same period of the previous fiscal year. Tax revenues grew by 38.3%, boosting general revenues by 34.6%, to reach EGP 892bn, despite the negative effects of economic conditions.
The total deficit rose to 6.7% of GDP, from 5% last year, due to higher interest rates. General expenses also increased by about 52% for the same reason. The Suez Canal generated EGP 114bn in the first half of the current fiscal year, out of the projected EGP 160bn.
Maait said in a press conference today that the state managed its public finances well amid huge challenges, caused by the economic slowdown, regional and international geopolitical tensions, and the impact on Suez Canal revenues from disruptions in the Red Sea. He also highlighted the expansion of social protection measures and the state treasury’s efforts to mitigate the inflationary effects on citizens, especially in subsidizing wheat, petroleum, goods, and bread, as well as supporting some of the economic sectors most affected by global crises.
He added that most of the proceeds from the Wisdom Sovereign Fund deal will go to the state treasury as revenue, helping to achieve the targets of lowering the debt-to-GDP ratio to 94% or less and exceeding the expected rates in the total deficit and initial surplus by the end of the current fiscal year.
The Finance Minister reaffirmed that the government is working to ensure the supply and stability of goods and prices in the markets, and to improve the living standards of citizens to ease the cumulative effects of global crises in the past two years. He noted that the value of goods released since January last year has surpassed $13bn.
Maait announced that an agreement has been reached with the International Monetary Fund to complete the first and second reviews and raise the funding to $8 billion, along with $1.2bn from the Green Climate Fund, and additional financing arrangements with other entities such as the World Bank, the European Union, the African Development Bank, the European Bank, the Arab Monetary Fund, and the Japanese side, bringing the total value of support for the economic reform programme from international institutions and development partners to over $20bn, plus $35bn from the Ras El Hekma deal. He pointed out that the economic reform programme with the International Monetary Fund lasts for three years, and the first tranche will be disbursed after the Fund’s Board meeting.
Maait also said that we have no plan to borrow from international markets until the end of the current fiscal year, and we aim to reduce the financing cost for the state treasury. He explained that we continue the government offerings programme in line with the state’s efforts to stimulate the private sector and increase its share in public investments, to lead the economic activity in the coming period, along with providing more dollar revenues for the state.
A law has been issued to cancel tax exemptions for state-owned companies and entities and to improve tax incentive management by linking it to the results on the ground. We are working to support all sectors of the national economy, especially the productive and service ones such as industry, agriculture, telecommunications, and tourism. We do not intend to increase customs tariffs, but rather to reduce them in the coming period to achieve stability and reduce the burdens on domestic production.
The new budget targets for the fiscal year 2024/2025 are one of the government’s tools to correct the path of the Egyptian economy and restore stability. We aim to achieve an initial surplus of at least 3.5% and reduce the debt-to-GDP ratio to less than 90%. We also aim to rationalize spending by limiting the financial allocations for all budget entities to what is set in the current fiscal year, except for health, education, social protection, industrial, and productive sectors. We believe that setting a ceiling for public investments for all state entities at one trillion pounds will create space for the private sector and increase its investments in the national economy.
The Minister of Finance said that the application of the general government budget as of the fiscal year 2024/2025 and the inclusion of all economic entities within the next five years will help improve the economic and financial performance indicators, reflecting the capabilities and capacities of the Egyptian state. He added that we continue to modernize and develop the tax administration system, having exceeded one billion electronic invoices, and to update the general state finance management.
Ahmed Kouchouk, the Deputy Minister of Finance for Fiscal Policies, stated that we have dealt with the economic challenges over the past eight months with more care to achieve financial discipline without neglecting the priorities and necessities. He explained that the past eight months also witnessed a 40% annual increase in spending on social protection and a 60% annual growth rate in the Ministry of Social Solidarity programs, including Takaful and Karama, a 37% increase in health spending, and a 19% increase in education spending. He also noted that a significant increase in tax revenues reflects the efforts to expand the tax base through optimal utilization of automated systems, as well as a 21% increase in non-tax revenues.
Ehab Abu Aish, the Deputy Minister of Finance for Treasury Affairs, said that economic entities do not have special funds or accounts and they spend on their activities from their revenues, with the surpluses going to the state. He pointed out that special funds and accounts are subject to the oversight of the Ministry of Finance and the Central Auditing Organization and they are one of the sources of financing the general budget.
