{"id":618698,"date":"2024-04-18T00:00:00","date_gmt":"2024-04-18T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2024\/04\/18\/economy-to-grow-at-a-4-0-clip-in-preliminary-budget-report-for-fy-2024-25\/"},"modified":"2024-04-18T00:00:00","modified_gmt":"2024-04-18T00:00:00","slug":"economy-to-grow-at-a-4-0-clip-in-preliminary-budget-report-for-fy-2024-25","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2024\/04\/18\/economy-to-grow-at-a-4-0-clip-in-preliminary-budget-report-for-fy-2024-25\/","title":{"rendered":"Economy to grow at a 4.0% clip in preliminary budget report for FY 2024-25"},"content":{"rendered":"

More on <\/strong>next fiscal year\u2019s budget: <\/strong>The Finance Ministry yesterday released its preliminary<\/a>budget report (pdf)<\/a> for fiscal year 2024-2025, giving us a peek into government\u2019s growth, inflation, deficit, and primary surplus targets for the year to come.<\/p>\n

TL;DR: <\/strong>Growth projection slashed again to 4.0% | Inflation targets revised upwards to an average of 18.1% | Budget deficit to widen slightly by 0.1 percentage point to 7.3%. <\/p>\n

GROWTH- <\/p>\n

Growth forecast for the next fiscal year down:<\/strong> The Madbouly government now sees the economy growing at a 4.0%clip in the coming fiscal year, down from the 4.1% penciled in for the current fiscal year and from the 4.2% projection<\/a> the government made in March. <\/p>\n

This is less optimistic than the IMF and World Bank\u2019s latest predictions this week<\/strong>, even after the IMF dampened its expectations<\/a> of growth for FY 2024-25 to 4.4% in its updated World Economic Outlook, down by 0.3 percentage points from its last projection in January. The World Bank also has a more optimistic outlook in its forecasts this week and expects<\/a> the country\u2019s economic growth to pick up to 4.2% in the next fiscal year.<\/p>\n

INFLATION- <\/p>\n

Less ambitious inflation targets:<\/strong> The government now sees annual headline inflation ending FY 2024-25 at an average of 18.1%. The government blamed \u201cincreasing prices of food, fuel, and intermediate goods, and supply chain disruptions.\u201d<\/p>\n

But the new targets are still more ambitious than the IMF\u2019s forecast<\/strong>, which penciled in inflation reaching an average of 25.7% during the same period.<\/p>\n

THE DEFICIT-<\/p>\n

Budget deficit to widen next year, but less than originally thought:<\/strong> The government now sees the budget deficit finishing the next fiscal year at 7.3% from 7.0% this year and 6.0% the year before. The government\u2019s January forecast<\/a> had initially penciled in a more optimistic 7.2% for the next fiscal year and a more pessimistic 7.5% for the current fiscal year.<\/p>\n

The primary surplus <\/strong>is expected to jump 1.0 percentage point next year to 3.5%, up from the2.5% that was estimated in January. The government\u2019s forecast of 2.5% for the current fiscal year remains unchanged.<\/p>\n

MONEY IN, MONEY OUT- <\/p>\n

Another good year for the taxman ahead:<\/strong> Revenues are expected to rise by 22.6% to some EGP 2.6 tn in the upcoming fiscal year, up from a projected EGP 2.1 tn this year. Tax revenues will make up 77.0% of that sum, coming in at EGP 2.02 tn \u2014 up 32.2% y-o-y. Non-tax revenues are expected to inch down 1.5% to some EGP 604 bn.<\/p>\n

Spending inches closer to EGP 4 tn mark: <\/strong>Spending for the upcoming fiscal year is projected to increase by 29.4% to EGP 3.9 tn, with most of the spending allocations will go towards interest payments, social support, and investments. <\/p>\n

Also worth noting: <\/strong><\/p>\n