What can we expect from next fiscal year’s budget? Yesterday, we got our firstglance at the Finance Ministry’s fiscal projections for the fiscal year 2024-2025, giving us the government’s initial targets for growth, inflation, deficit, and primary surplus for the year. The budget call circularseen by Enterprise also laid out revised projections for the current fiscal year.

GROWTH-

Growth to pick up: The Madbouly government sees the economy growing at a 4.7% clip in thecoming fiscal year from an estimated 3.0% in FY 2023-2024 and 4.2% the year before.

This year’s growth forecast slashed again: This year’s growth projections are 0.5 percentagepoints lower than Planning Minister Hala El Said’s latest forecast. Last month, the minister said she expects the economy to grow at a 3.5% clip in the fiscal year ending June 2024.

A little less optimistic than international monitors: The IMF, the World Bank, and S&PGlobal penciled in 3.5-3.7% growth in FY 2023-24 late last year.

But more optimistic than one: Capital Economics expects the economy growing “well belowconsensus expectations” at 2.5% this fiscal year and 3.8% for the next year. “Over the remainder of this fiscal year and heading into FY 2024-25, the growth outlook is pretty bleak,” MENA economist James Swanston wrote in a note seen by Enterprise

INFLATION-

Ambitious inflation targets: The government is hoping to see annual headline inflation fall toan average of 15% for the upcoming fiscal year, a significant drop from the estimated 38% for the current year.

Other targets:

  • Budget deficit: The government now sees the budget deficit finishing the current fiscalyear at 7.5% — from a previously projected 7.0% — from 6.0% the year before. The state sees the budget deficit narrowing slightly to 7.2% for FY 2024-25.
  • Primary surplus: This year’s primary surplus remains within the government’s initialexpectations of 2.5% and will remain the same through next year.
  • Debt-to-GDP: The country’s debt-to-GDP ratio will fall to 92.2% this fiscal year from95.7% recorded in June of last year. The government sees the debt-to-GDP ratio narrowing further to 91.9% in the coming fiscal year.
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