Egypt’s Fiscal Performance in the 2023-24 Financial Year

While Egypt’s fiscal performance in 2023-24 shows significant achievements, ongoing economic reforms are essential for sustainable growth.

In a significant fiscal achievement for Egypt, the country reported a primary budget surplus of 6.1 percent for the fiscal year 2023-24, largely attributed to a landmark sale of coastal land to the UAE.

Finance Minister Ahmed Kouchouk announced this development at a recent press conference, highlighting the pivotal role of this transaction in the nation’s financial stability.

In Egypt, the fiscal year is July 1 to June 30.

Egypt’s fiscal performance in FY 2023-24

Financial overview and key transactions

Egypt’s total expenditure for FY24 amounted to 3.016 trillion Egyptian pounds (approximately US$61.3 billion), with a budget deficit standing at 3.6 percent. The country’s tax revenue was 1.63 trillion Egyptian pounds and all other revenue amounted to 871 billion Egyptian pounds.

A notable boost came from a historic foreign direct investment (FDI) deal in February 2024, where the UAE, through a consortium led by Abu Dhabi’s sovereign wealth fund ADQ, committed US$35 billion to invest in Ras El-Hekma, a Mediterranean region situated 350 kilometers northwest of Cairo. This deal marks the largest FDI in Egypt’s history, reflecting growing international confidence in the country’s economic potential.

Revenue and spending dynamics

The fiscal year saw no new taxes imposed, yet tax revenues surged by 30 percent year-on-year, aligning with the International Monetary Fund’s (IMF) goals for Egypt to enhance its tax intake by the 2025/26 budget. Minister Kouchouk emphasized the administration’s focus on improving public services and maximizing resource allocation to benefit citizens, particularly in human development areas.

Despite the positive fiscal numbers, Kouchouk acknowledged the need for tangible improvements in economic performance, business competitiveness, and living standards. He underscored the challenges facing the government and economy, stating that while the budget numbers have improved, translating these into meaningful economic advancements remains crucial.

Sectoral spending increases

Significant increases in spending were noted in various sectors: education saw a 25 percent rise, health received a 24 percent boost, and social protection allocations grew by 20 percent. Notably, support and social protection spending has more than doubled since the 2020/21 fiscal year, reaching 550 billion Egyptian pounds. This surge is intended to mitigate the impact of economic reforms on the populace.

Investment strategies and fiscal adjustments

Minister Kouchouk also highlighted a decline in public investments but stressed efforts to boost private sector contributions, especially in industry and export sectors. Egypt plans to explore local debt markets and new debt instruments to address a persistent budget deficit, which for the fiscal year ending June 30, 2024, amounted to 505 billion Egyptian pounds (about US$10.3 billion).

The finance ministry is considering various local debt instruments, including variable-rate treasury bonds, green bonds, and sukuk, aiming to reduce reliance on international debt markets. The average maturity of Egypt’s foreign debt is noted to be 13 years, which is considered favorable.

Looking ahead: Economic reforms and IMF involvement

Egypt’s economic reforms, initiated to empower the private sector and attract investment, have started to show positive results, as noted by former Finance Minister Mohamed Maait. These reforms include measures such as raising fuel prices and increasing bread prices, which are benchmarks in an US$8 billion IMF program signed in March 2024.

The IMF has emphasized the need for Egypt to enhance its tax revenues to fund priority needs, a point reiterated by IMF representative Ivanna Vladkova Hollar.

For the fiscal year starting July 1, 2024, Egypt has planned an expenditure of 3.9 trillion Egyptian pounds against a revenue target of 2.6 trillion Egyptian pounds.

Conclusion

In conclusion, while Egypt’s fiscal performance in 2023/24 showcases significant achievements and strategic advancements, continued focus on economic reforms, investment strategies, and tax revenue enhancements will be essential for sustaining this progress and addressing future challenges.

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