Debt in focus as House debates FY 2023-24 budget: Our elected representatives kicked off the first day of debates over the FY 2023-2024 budget on Sunday, with some MPs raising concerns over high levels of foreign borrowing.

Opposition parties oppose high borrowing: The Egyptian Socialist Democratic Party and the liberal Reform and Development Party said they would reject the budget and the social and economic development plan because they don’t include a long-term plan to cut back on foreign borrowing. Reform and Development Party Spokesperson Ayman Abul Ela also said the budget didn’t allocate enough to education and health spending. Egyptian Socialist Democratic Party Spokesperson Ihab Mansour went as far as to call on MPs to withdraw their confidence in Prime Minister Moustafa Madbouly’s government over its handling of the economic crisis.

Some independents also had concerns over debt: Independent MP Mohamed Abdelaziz said that "MPs have repeatedly called upon the government to restrict foreign borrowing to cut debt servicing, but our calls usually go to no avail,” adding that too much of taxpayers’ money is spent on debt servicing. Chair of the House Planning and Budgeting Committee Fakhry El Fiqi also warned of the risk of excessive borrowing at a time of high interest rates globally, pointing out that the state will spend some EGP 1.12 tn — or 37% of total spending — on debt servicing next fiscal year.

Majority parties struck a more positive note: The three majority political parties — Mostaqbal Watan, Protectors of the Nation (Homat El Watan), and the Republican People’s Party — all voiced their approval of the budget and development plan, saying it balances support for the most vulnerable in society with fiscal discipline.

REMEMBER- Overall spending is set to rise 34% y-o-y to EGP 2.99 tn in FY 2023-24. While debt servicing is the single biggest component of that, the budget also lays out increased spending on social safety programs and subsidies, as well as on wages, commodity purchases, social support, public investment, education and health. The Madbouly cabinet is targeting a 7% budget deficit next fiscal year, down from a projected 8% this fiscal year.

What’s next: MPs will continue to debate the budget and development plan through to Tuesday when a final vote could be held. The Senate approved the FY 2023-24 development plan last week.

Tags: