The IMF expects our budget deficit to widen significantly during FY 2023-24, according to figures in its biannual fiscal monitor (pdf) published last week. The Fund is forecasting the deficit to increase to 10.7% of GDP this year from an estimated 4.6% the previous year. This would be the largest budget deficit as a percentage of GDP since the 2015-16 fiscal year.

The IMF had projected a 9.2% deficit this fiscal year in its previousforecast (pdf) in April.

Higher for longer:The deficit is expected to remain elevated in the coming years, widening to 11.1% next year before narrowing to 10.1% in FY 2025-26 and 7.8% by FY 2027-28.

A smaller primary surplus: The IMF is now projecting the primary surplus to narrow to 1.5% of GDP in FY 2023-24 from an estimated 2.3% last year. In April it had expected the surplus to grow to 2.2% this year from 1.6% in FY 2022-23.

Spending is rising rapidly. Revenues are not. The IMF now expects government spending to rise to 28.9% of GDP in FY 2023-24, up from an estimated 22.8% last year. At the same time, government revenues will remain flat as a percentage of GDP, with the Fund forecasting them to come in at 18.1% for the second year in a row.

The wrong direction: The IMF’s previous projections had revenues rising to 19.8% of GDP this year from 18.7% last year. The latest spending forecast is essentially unchanged from April’s 29.0% forecast.

Debt-GDP to fall, but by less than previously thought: The IMF is now forecasting Egypt’s gross debt to fall to 88.1% of GDP this year from an estimated 92.7% in FY 2022-2023. In April, the Fund had expected debt to fall to 87.0% from 92.9% the previous year.

Remember: The IMF last week downgraded its FY 2023-24 growth outlook for Egypt for the second time this year. It now expects the economy to grow at a 3.6% clip this year, down from an estimated 4.2% in FY 2022-23.

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