Egypt’s draft budget for FY 2026–27 is shaping up as a statement of recovery. Two government officials tell EnterpriseAM that the plan will focus on narrowing the deficit, boosting revenues, and containing the pace of spending growth. The draft is now in its final stages ahead of its constitutional deadline for submission to the House in late March.

Why it matters: The budget is expected to be the financial expression of the country’s reform drive. Officials see it as a concrete manifestation of the economic reform program that authorities expect to wrap up with the IMF in October, paving the way for what they describe as a new phase of sustainable reforms.

The details

Total public revenues are projected to exceed EGP 3.5 tn in the new fiscal year, according to the officials. The government is targeting an increase equivalent to 1–2% of GDP, largely driven by stronger tax and customs collection. Tax revenues alone are expected to hit EGP 2.8 tn, up from an estimated EGP 2.6 tn in the current budget.

The strategy hinges on widening the tax base and tightening compliance rather than introducing sweeping new levies. Authorities aim to add 100k new taxpayers to the rolls and amend the VAT Law to bring several goods under the umbrella while limiting inflationary pressures. This builds on earlier tax facilitation measures that have already fueled a 35% increase in tax receipts.

The treasury collected an additional EGP 68 bn last fiscal year after government contracts were subjected to the same tax treatment as those in the private sector. The state plans further steps to regulate contributions from state-owned enterprises and economic authorities, reinforcing a level playing field.

The Finance Ministry is also looking beyond traditional revenue streams. It is studying a package of exceptional revenues, including securing a 50% share of proceeds from newly issued licenses and state divestment transactions, the officials said. At the same time, authorities also plan to tighten oversight of special funds and accounts, introducing new spending regulations to strengthen control over domestic revenues.

On the spending side, growth is expected to slow as the state continues to unwind broad-based subsidies. Energy subsidies will be further reduced, although diesel and butane will remain supported. Oil price assumptions are still under review amid global and regional risks that could drive prices higher. The current budget is based on an oil price of USD 77 per barrel.

Even as overall expenditure is rationalized, social protection will remain central. The government intends to accelerate the shift toward targeted direct transfers and increase allocations for the Takaful and Karama program, aiming to ensure that support reaches those who need it most.

Officials are targeting an ambitious deficit of 4.9% in FY 2026-27, down from 7.3% projected in the current budget. While sources acknowledge that the final figure could come in slightly above this “optimistic” target, they stress it will remain lower than current levels. A decline in interest rates and easing debt-servicing costs are expected to help bring the deficit down.

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