FinMin drafts EGP 9.7 tn consolidated budget for FY 2026-27

Good morning, wonderful people. We’re heading to the weekend with both a busy issue and a shot of good news:

The EGP continued to strengthen yesterday, breaking below EGP 52 to the greenback at banks including the NBE and Banque Misr (buy rate at 51.97) and CIB (51.95).

(Tap or click here to listen to the 10-minute version of this morning’s issue — Morning Drive is out Sunday-Thursday at 6:15am and is perfect to listen to if you’re in a rush, behind the wheel, or need something to listen to while you suit up for a day at the office.)

The driver? A wave of returning hot money inflows. Some USD 450 mn came in yesterday, bankers we spoke with estimate, bringing the two-day total to just under USD 1.8 bn.

We won’t be out of the woods until the war in the Gulf is over, but this much is clear: Officials do not have their thumb on the scales, and that’s allowing the EGP to do exactly what it’s meant to do — to serve as a shock absorber.

“If inflows continue and there is no further escalation [of the war], the EGP could recover further, potentially pushing the USD toward the EGP 50 level,” one banker told us.

Privatization: A welcome recalibration?

The Madbouly government is cutting its estimate of how much it will net from the sale of state assets through the privatization program. Officials now expect to bring in proceeds of c. USD 4.5 bn in the coming three years, a senior government official tells us — that’s a significant dip from the USD 6 bn target officials had hoped to hit in the upcoming fiscal year alone.

Cabinet sees the privatization process as being about bringing in the private sector, not just the maximizing of receipts, the official reiterated.

Underpromise, overperform: There may be upside to the USD 4.5 bn in three years figure, but this is a welcome recalibration. Spillover from the conflict in the Gulf has sapped investors’ appetite for risk and we need a big, successful IPO (or two) to prime the pump for more listings. Much better that Cabinet signal a realistic outlook than commit to targets that external forces have (for now) made unrealistic.

Banque du Caire and Misr Life are two of the three big privatization sales now on deck, Finance Minister Ahmed Kouchouk told reporters earlier this week. The government continues with administrative procedures to list other assets that could be folded into the program, but we see this as exactly what they are: Early administrative procedures for which officials would like tub-tubs, not meaningful progress.

Budget: No more slush funds

BUDGET WATCH — FinMin is drafting a consolidated general government budget for the third consecutive year in line with an agreement struck with the International Monetary Fund — and we’ve had a sneak peek. General budget expenditures in FY 2026-27 will rise to EGP 9.7 tn from the EGP 8.5 tn expected by the end of the current fiscal year, according to a document seen by EnterpriseAM, while revenues will increase to EGP 8.34 tn from EGP 7.2 tn.

But Enterprise, isn’t a budget just a budget? No, this is the general budget we all know but with financial data from all public economic authorities attached. There are currently 59 public economic authorities across 12 sectors included in the consolidated budget — think of the Grand Egyptian Museum, the Suez Canal Economic Zone (SCZone), or the General Authority for Industrial Development. All of those are public economic authorities, and their revenues are reflected in this consolidated budget. Most of these are established by presidential decree to manage a public utility or provide a public service and have broad powers to manage their own financial and administrative affairs.

Why should you care? Think of the consolidated general budget as a welcome dose of sunshine: It helps curb room for ministries and other authorities to hang onto their ‘personal’ slush funds. The Finance Ministry has for years pushed all arms of the state to return proceeds to the treasury, eliminating room for them to hang on to cash and use them for off-the-books purposes.

It doesn’t stop there: Some arms of the state don’t provide services with the same efficiency as, say, the good folks at the SCZone — and are less capable of generating revenue, which leads them to seek subsidy support or borrow with government backing. That all comes out in the consolidated general budget.

Did PHD just get a piece of Ras El Hekma?

Palm Hills Developments has reportedly reached an agreement with the UAE’s Modon to develop a 2k feddan project in Ras El Hekma. Palm Hills is reportedly hoping to launch sales of the project’s first phase as early as this summer to tap summer interest in the North Coast. We’re poking into the story and will be back with fresh details next week.

No IMF top-up?

The IMF is not currently discussing a top-up of Egypt’s USD 8 bn loan program despite the regional war’s impact on our economy, Reuters reported, citing comments by IMF Managing Director Kristalina ‌Georgieva.

Gov’t eyeing 5% growth target?

Egypt’s economy is expected to grow by a rate ranging between 4.8% and 5% during 3Q of the current fiscal year, Planning Minister Ahmed Rostom said on the sidelines of IMF and World Bank Spring Meetings in Washington. Growth in the 4Q remains contingent on the de-escalation of regional geopolitical tensions, he reportedly said. Should these conditions persist, Q4 growth is projected at 4.5%, bringing the full fiscal year rate to an estimated 4.9% to 5%, Rostom said.

Earlier this week the IMF downgraded Egypt’s GDP forecast to 4.2% in 2026, a 0.5 percentage points decrease from its January projection.

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WEATHER- We are in for another sweltering day in Cairo today, with a high of 37°C and a low of 23°C, according to our favorite weather app.

It’s enviously much cooler in Alexandria, with a high of 26°C and a low of 18°C.

And over the weekend, expect the mercury to fall below 30°C in the capital and below 25°C for our friends on the Mediterranean.

The big story abroad

The US-Iran ceasefire lives another day with no news of a breakthrough. White House officials signaled confidence that a diplomatic resolution is within reach. Talks brokered via Pakistan are “productive and ongoing,” White House press secretary Karoline Leavitt said, but denied reports that Washington formally asked to extend the truce.

Stocks went on a tear yesterday, suggesting traders think that the end of the war is nigh. The S&P 500 closed nearly 1% higher yesterday, hitting a new all-time high as it extended a two-week rally that began just before the current ceasefire came into effect. CNBC has some color here.

And oil steadied in response to unconfirmed reports a ceasefire extension, with Brent crude settling near USD 95.

In less-welcome news: US President Donald Trump renewed his threat to sack Federal Reserve Chair Jay Powell. Trump wants Powell out on 15 May, when his term as Fed chair comes to an end, even if Kevin Warsh — who Trump has named as Powell’s successor — hasn’t been confirmed by Congress by that date. Tradition would have Powell stay on until a success is in place.

Trump also said he’s not going to call off a Justice Department probe of Powell’s renovation of the Fed’s DC headquarters. Folks are also holding their breath to see if Powell steps down from the board when he exits as chair — while his term at the head of the table runs out on 15 May, he isn’t required to leave the board until January 2028.

Also in the US of A: JPMorgan Chase, Goldman Sachs, and Citigroup are all doing largeshare buybacks, as are Bank of America and Morgan Stanley. The biggest US banks have spent a combined USD 33 bn on the buybacks, the FT reports, amid strong 1Q earnings.