Egypt recorded its highest-ever primary surplus of EGP 629 bn — 3.6% of GDP — in the fiscal year 2024-2025, up 80% y-o-y. This came during a meeting yesterday between President Abdel Fattah El Sisi, Prime Minister Moustafa Madbouly, and Finance Minister Ahmed Kouchouk to review last fiscal year’s preliminary financial indicators.

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The surplus came despite external pressures including a 60% shortfall in Suez Canal revenues compared to budget targets, leading to a gap of about EGP 145 bn, Kouchouk said.

Tax revenues saw their fastest growth in years, rising 35.3% y-o-y to EGP 2.2 tn, which Kouchouk attributed to tax measures introduced to widen the tax base and create a more efficient tax system.

REMEMBER- The Finance Ministry has been rolling out tax reforms aimed at boosting tax revenues without the introduction of new taxes, that includes measures to make it more attractive for businesses to settle disputes dating to before 2020 and simplifying the SME tax regime.

Already bearing fruit: Between February and August around 402k companies put in requests to settle pre-2020 tax disputes and more than 104k SMEs have filed requests to qualify for the new tax breaks, under which they will be taxed on their turnover. The Finance Ministry also received 650k amended and new tax returns, generating nearly EGP 78 bn in revenues.

Revenue growth outpaces spending: Total revenues rose 29.0% y-o-y during the fiscal year, while primary spending increased at a slower pace, growing by 16.3% y-o-y.

No word on growth: The meeting didn’t cover other indicators that would help give us a better understanding of the fiscal year’s performance, like growth. We know that the government expects growth for FY 2024-25 to exceed its 4.0% target, thanks to a rebound in private investment and non-oil manufacturing activity.

Moving forward: El Sisi directed the officials to keep their focus on fiscal discipline, while working more closely with the private sector to sustain growth and financial stability. Priorities include cutting debt service costs, maintaining a primary surplus, and channeling more spending toward social protection programs, along with additional allocations for healthcare and education.

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