Egypt’s new budget gets approval

Egypt, grappling with an economic crisis, has announced plans to allocate 127.7 billion Egyptian pounds ($4.14bn) for its food subsidy programme in the upcoming fiscal year starting from July 1. This marks an increase from the previous year’s allocation of 90 billion Egyptian pounds ($2.92bn). With approximately one-third of Egypt’s 105 million population living in poverty, the government plays a crucial role in ensuring affordability of basic goods through state subsidies and similar schemes.

The approval of the three-trillion-pound budget ($97.41bn) for 2023-2024 by Egypt’s parliament has been confirmed by a documents recently made public. The budget outlines total expenditure of 2.991 trillion pounds ($94.49bn) and revenues of 2.142 trillion pounds ($69.55bn) for the coming year. Additionally, the budget factors in an assumed oil price of $80 per barrel of Brent crude, estimating a real GDP growth of 4.1% and an average inflation rate of 16%.

Egypt’s finance ministry has projected a requirement of 8.25 million tonnes of wheat for the subsidy programme. As one of the world’s largest wheat importers, Egypt’s economy has been impacted by Russia’s invasion of Ukraine, given Ukraine’s significant role as a wheat exporter. Meanwhile, discussions are underway for the potential sale of a large power plant in Beni Suef, south of Cairo, which could amount to a $2bn deal with Actis LLP and Edra Power Holdings Sdn Bhd, offering a significant boost to the country’s economy.

The depreciation of Egypt’s currency by nearly half and the withdrawal of over $20bn from Egyptian treasury markets by foreign investors have added to the ongoing challenges. To address these issues, Egypt aims to attract $10bn in investments over the next four years, along with pursuing privatizations to meet impending foreign debt obligations. Recently, a $460m financing agreement for Cairo’s metro lines was signed with South Korea, and the Egyptian finance ministry announced the sale of a 9.5% stake in state-controlled Telecom Egypt for 3.75 billion Egyptian pounds ($122.4m) as part of the government’s privatization program.

Amidst the ongoing crisis, Egypt has relied on imports of basic foods and fuels. In an effort to diversify payment options, discussions are ongoing with Russia, China, and India regarding the possibility of using currencies other than the US dollar for import payments, as highlighted by Egyptian Supply and Internal Trade Minister Ali Moselhy.