Gov’t budget cutbacks are making a comeback: Ministers last week approved in principle fresh cutbacks to government spending through the end of the current fiscal year due to the ongoing FX crunch, according to a cabinet statement.

Limits on FX spending: Under the decision, spending on any new project that requires FX and is yet to begin will be delayed, alongside any “unnecessary” FX spending. The Finance Ministry will need to sign off on any exceptions.

Cut any unnecessary spending: The decision will also require all government entities to delay any spending that doesn’t fall under the “extremely necessary” criteria, the cabinet statement said, without explaining how this is being defined.

The government is also ending all “non-essential” spending, including the travel budget for government personnel and spending on marketing, attending conferences, and hosting work events.

The exception: The decision pinpoints a single exemption from the budget cuts — investments approved by the Planning Ministry.

Carry your own weights: State institutions will be required to work to boost their revenues and become less dependent on the already-strained state budget for funding.

We’ve seen this before: The Madbouly government in January directed ministries to make budget cutbacks until the end of the fiscal year in June. The move came in a bid to address a shortage of hard currency and tamp down inflation.

ِALSO GREENLIT BY THE CABINET:

  • An education investment fund: The Higher Education Ministry and the Sovereign Fund of Egypt (SFE) to establish a joint education investment fund — dubbed the Egypt Fund for Education Support and Development — to help drum up education investments from private sector players.
  • Easier licensing for MSMEs: Amendment to the micro, small, and medium enterprises (MSMEs) executive regulations, which would allow for easier licensing for MSME projects.
Tags: