The draft budget is here: Yesterday, Finance Minister Mohamed Maait delivered his budget statement to the House, giving us the first proper look at the draft state and public government budgets (pdf) for the next fiscal year.

ICYMI: Budget season is going to be a bit different this time round, with the issuing of the first Public Government Budget. The new budget — which does not replace the state budget — shows the budgets of all the state’s economic bodies in addition to the state budget collated together. The first phase includes some 40 economic bodies.

MACRO GOALS-

Growth to pick up: Economic growth will accelerate to 4.2% in the coming fiscal year, up from an estimated 2.9% in FY 2023-2024, and little above last year’s 3.8%. The figure is 0.2 percent higher than the 4.0% clip projected in the preliminary budget report the Finance Ministry released last week.

We’re in for a significant drop in inflation: Headline inflation will average 17.9% over the 12-month period, down from a projected 35.7% this fiscal year, according to the document. This is slightly below the 18.1% the government penciled in in the preliminary budget.

Oil prices to go down: The government sees Brent crude prices averaging USD 82 per barrel from July 2024 through to June 2025, down from a projected USD 85 a barrel this fiscal year.

Wheat prices remain flat: The government is expecting wheat prices through the 12-month period to average at USD 280 a ton — the same level throughout FY 2023-2024.

MONEY IN, MONEY OUT-

Taxpayers are still chipping in the most to revenues: The state sees revenues rising some8.5% to 2.6 tn in FY 2024-2025, up from an estimated EGP 2.4 tn this fiscal year. Most of these revenues are made up of taxes, which are expected to log in at EGP 2.0 tn next fiscal year, amounting to some 77.0% of total revenues. That’s above this year’s projected EGP 1.6 tn, according to the document. Non-tax revenues are expected to fall in the next fiscal year to EGP 603.2 bn, down from the EGP 869.7 bn forecasted for this fiscal year.

Expenses are on the rise as well: Spending for the upcoming fiscal year is projected to increase to EGP 3.9 tn next year, up from EGP 3 tn this fiscal year, with most of the spending allocations going towards interest payments, social support, and investments:

  • The state’s wage bill will climb 16.6% to EGP 575.0 bn from a projected EGP 493.9 in the current fiscal year;
  • Debt servicing costs will increase 34.9% to EGP 1.8 tn, up from EGP 1.4 tn forecasted for the current fiscal year;
  • Commodity purchases will rise 22.1% to EGP EGP 166.7 bn, up from EGP 136.5 bn forecasted for the current fiscal year;
  • Public investment will rise 48.3% to EGP 495.8 bn, up from EGP 333.9 forecasted for the current fiscal year;
  • Allocations to education will rise 45.2% up from from the current fiscal year’s budget to EGP 858 bn
  • Health spending is up 24.9% on the last budget to EGP 496 bn;
  • Social security spending will rise 14.9% in the new budget to EGP 548.7 bn.

DEBT-

Debt as a proportion of GDP to fall this year and next year: The government forecasts the country’s debt-to-GDP ratio falling to to 89.0% by the end of the current fiscal year, from 95.7% in the last fiscal year. The country’s debt-to-GDP ratio is expected to fall to 88.2% in the next fiscal year, and is aiming to push the figure below 80% by the fiscal year 2026-2027.

DEFICIT-

Next year: The government sees the budget deficit rising to 7.3% of the country’s GDP in the next fiscal year, from 7.2% estimated in the budget for the current fiscal year.

THE CONSOLIDATED BUDGET FIGURES-

Revenues in the consolidated budget are projected at EGP 5.3 tn, when factoring in estimated revenues from the state’s economic entities, which amount to EGP 3.2 tn. The expenses forecasted for these bodies are at the same EGP 3.2 tn level, prompting the government to expect its consolidated expenses to reach EGP 6.6 tn.

SOCIAL SAFETY NET-

Total spending on measures to support at-risk households, businesses, and individuals is in for a 19% boost, with the government saying it will spend almost EGP 636 bn next year, up from EGP 529.6 bn in FY 2023-2024, as the government pump up funds on subsidies to mitigate the impact of inflation and shore up the economy.

Fuel subsidies up: The government has increased fuel subsidies allocations in FY 2024-2025 to EGP 154.5 bn, up 29.4% from 119.4 bn this fiscal year.

Food subsidies also will rise: Allocations to food commodities will inch up around 5.1% next fiscal year to EGP 134.2 bn, up from EGP 127.7 bn this year, according to the document.

What’s next? The budget will be referred to the House’s Budget Committee for discussion and it should go up for a vote at the general assembly before the start of the new fiscal year on 1 July. If the budget doesn’t pass before 30 June, the current budget rolls forward to direct state spending until the new document is passed. Meanwhile, the socioeconomic development plan will be sent to the Senate for discussion and a vote.

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