The budget deficit came in lower than expected last FY: Egypt’s budget deficit narrowed to 6.0% in the 2022-2023 fiscal year that ended on 30 June, according to figures released by the Finance Ministry on Thursday.

The gov’t wasn’t expecting the budget deficit to narrow: The figure came in below last year’s 6.1%. Preliminary indicators released last month had suggested a deficit of 6.2%, while the ministry put the figure at 6.4% in a May estimate.

Remember: This deficit figure doesn’t account for borrowing in 4Q. The government forecast in May an “adjusted budget deficit” of 8.0% for the fiscal year. This figure includes the EGP 165 bn in fresh borrowing approved in March to cover debt service and wage and pension hikes in the final quarter of the year.

An improved primary surplus: In line with preliminary data, the country recorded a primary surplus of 1.6% (EGP 164.3 bn) in FY 2022-2023, up from 1.3% the year before.

Higher tax revenues + higher spending: Tax revenues rose 27% y-o-y, while spending rose almost 19%, the ministry said, without disclosing the raw figures. Preliminary data had suggested a 23% rise in tax revenues to EGP 1.2 tn and a 16% rise in spending to EGP 2.1 tn.

Debt / GDP increases: The weakening of the EGP against the USD and rising interest rates added another EGP 1.3 tn to the government’s debt bill, or 13.1% of GDP. As a result, the debt-to-GDP ratio rose to 95.6% by the end of FY 2022-23 from 87.4% the year before, in line with expectations.

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