Egypt’s budget deficit narrows to 2.2% during 1Q of FY 2024-25

The FinMin gives us a rundown of key economic indicators for 1Q 2024-25: Egypt has seen its budget deficit narrow, its primary surplus expand, and its revenues up during the first three months of FY 2024-25, despite the ongoing regional war, according to the Finance Ministry’s latest monthly financial report (pdf).

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#1- Budget deficit narrowed to 2.12% of the country’s GDP in 1Q 2024-2025, recording EGP 361.8 bn, up from a EGP 455.8 bn deficit during the same period last year, driven by an increase in revenues, mainly from the taxpayers, and a decline in the debt service bill.

#2- Revenues were up 40.3% y-o-y during the three-month period to stand at EGP 470.1 bn, with the lion’s share collected from taxpayers, which made up 87.9% of total revenues.

Tax revenues saw a big leap in 1Q 2024-25, reaching EGP 413.3 bn, up 45% y-o-y — their biggest jump in 20 years. The jump was attributed to growth across all tax types, driven by better economic performance and the unwinding of the FX crisis. Additionally, tax systems digitization played a key role in improving tax administration and expanding the tax base, ultimately boosting revenues, according to the report.

#3- Government spending increased by 4.7% y-o-y, standing at EGP 827.7 bn in 1Q 2024-2025. This was driven by a 5.4% y-o-y dip in debt service bill, which sat at around EGP 452 bn thanks to “efforts to control public spending by improving debt management through distributing payments over the length of the fiscal year and diversifying financing sources.”

#4- Spending on support and subsidies also increased during the quarter, rising by 39.8% y-o-y to EGP 133 bn in 1Q 2024-2025. This included increased spending on food subsidies (EGP 26.1 bn) and social support programs.

The bigger picture: The government has penciled in growth of 4.0% for the fiscal year. Headline inflation is expected to drop to an average of 17.9% over the current FY. Meanwhile, the budget deficit is expected to increase to 7.3% of the country’s GDP.