CAIRO-Egypt is entering the new fiscal year 2025-2026 with the largest budget in its history, exceeding trillion pounds, in a continuation of the upward pattern that printed the last budgets in conjunction with the official decrease in the pound to an unprecedented level against foreign currencies.
This budget, which carries huge numbers, raises vital questions about the policies pursued by the state, and whether it will contribute to alleviating the burdens on citizens and improving their standard of living, or will it focus mainly on reducing the proportion of religion and the budget deficit.
The Egyptian Cabinet approved the 2025-2026 budget project, which begins next July with targeted revenues 3.1 trillion pounds (61.4 billion dollars), a growth rate of 19%, and the expenses of 4.6 trillion pounds (91 billion dollars), an increase of 18%.
The government aims to achieve a first surplus of 795 billion pounds (the dollar of 50.5 pounds), after excluding the benefits from the budget, equivalent to 4% of the domestic product, reducing the debt to 82.9% for the budget agencies (ministries and government agencies), and less than 92% for the public government (public budget agencies, in addition to public economic bodies).
Despite the upward pattern of the value of the budget in the Egyptian pound, its evaluation in the American dollar reveals a remarkable decrease of about 45% compared to the levels of 3 years ago, as a result of the decline in the exchange rate of the Egyptian pound.
The expected deficit is 1.5 trillion pounds (about 30 billion dollars), which is the difference between expenses and revenues that are not inclusive of debt installments that exceed this number, and the Egyptian government did not clarify the volume of funding that it will need, but it reached 2.849 trillion pounds (56.4 billion dollars).
The interest item in the current budget is 2024-2025, about 1.834 trillion pounds (36.3 billion dollars), equivalent to 47% of the total expenses and about 70% of the total revenue. However, given that the benefits constituted a large percentage of expenses in previous years, are expected to continue to represent a large part of government spending in the new budget.
This budget, which comes under difficult global and regional economic conditions, places Egypt the third largest economy in the region, in front of great challenges. On the one hand, the state seeks to achieve financial stability and reduce debts, and on the other hand, it faces increasing pressure to meet the needs of citizens and improve the level of basic services.
679.1 billion pounds (13.4 billion dollars) were allocated to the wages of state employees (about 4.6 million employees), with an annual growth of 18.1%.
The 2025-2026 budget also allocates an amount of 732.6 billion pounds (14.5 billion dollars) for support, grants and social benefits, an increase of 15.2%, with the aim of reducing burdens on citizens and targeting the most needy groups and includes:
- Supporting food commodities and baking loaf: 160 billion pounds, with a growth rate of 20%.
- “Takaful and Dignity” program: 54 billion pounds, an increase of 35%.
- Petroleum material support: 75 billion pounds, with a reduction of 50%.
- Electricity Support: 75 billion pounds.
The new budget between the requirements of burdens and economic reform
The professor of political economy and former World Bank adviser, Amr Saleh, explained that economic reform programs, or what is known as “structural adaptation”, such as liberalizing the exchange rate and reducing fuel and energy subsidies, leads to increasing the burdens of social services and direct support for citizens, and therefore the liberalization of the market requires more support to fragile groups, as is the case in many countries of the world.
Saleh added, to Al -Jazeera Net, that increasing social services is not limited to increasing their size in the budget, but also requires an increase in investments and production, which leads to low prices and improvement of wages, and thus reduce burdens on citizens in general.
Achieving this, according to the professor of political economy, depends on the response of the private sector to pump more investments, in conjunction with the state’s role that creates the attractive climate for private investment, through:
- Infrastructure development.
- The enactment of laws and regulations that facilitate investment procedures, protect investor rights, and reduce bureaucracy.
- Provide tax incentives and credit facilities.
- Investing in education and training to provide qualified human cadres.
- Providing accurate information and data on investment opportunities and potential risks.
- Encouraging partnerships between the public and private sectors.
According to the Minister of Finance, Ahmed Kajuk, the allocations for support, grants and social benefits contribute to alleviating the burdens on citizens and targeting the first categories of care.
It is scheduled to raise the minimum wage for employees to 7 thousand pounds (138.6 dollars) as of next July, and Kguk indicated that the lowest job degree will increase 1100 pounds (21.7 dollars) in the total wage per month.
Debt
The government set the roof of the state’s public budget debt in the current budget at 15.1 trillion pounds (299 billion dollars) and 88% of the GDP of 17.1 billion pounds (338.6 billion dollars).
Although the new budget put in place its eyes reduced the debt to 82.9% of the local production volume estimated by the government by about 19.87 trillion pounds (393.4 billion dollars), the amount of public debt may rise to 16.4 trillion pounds (325 billion dollars).
Budget (beautification)
Economist Ibrahim Nawar believes that “the estimates of growth, inflation, exports and global investment need a comprehensive review after the United States’s decision to increase customs tariffs, that there is almost unanimity among experts that global growth will decrease, and that inflation will rise, and that investments will decline compared to expectations issued at the beginning of the year.
Nawar warns, in his interview with Al -Jazeera Net, that these developments will have negative effects on the Egyptian economy, which was not taken into account when preparing the budget project, especially with regard to inflation and growth. Nawar indicated that he will see the draft budget data to analyze it in detail.
With regard to the initial surplus that the government is in the budget data, Nawar believes that it is an accounting number that does not reflect the true reality of the Egyptian economy. And he confirms that this nominal surplus fades in front of the tremendous financing gap and the service of public debt.
The economist asserts that the budget project did not take into account the real inflation rate when estimating revenues and expenses. He pointed out that the International Monetary Fund is only interested in showing that the extended financing program that he presented to Egypt was successful, regardless of reality. This scenario was repeated in a 2016 loan, where things appeared as they were after that, and the government was forced to request new loans.
The Egyptian government expects the growth of GDP by 4% during the fiscal year 2024-2025, with an initial surplus of 3.5%, which exceeds the estimates of international institutions. While the International Monetary Fund reduced its expectations for growth next year to 4.1%, and the World Bank to 4.2%, government estimates remain higher.
