In a significant fiscal achievement, Egypt has successfully reduced its total deficit to 3.6% during the period from July to May 2024. This marks a substantial improvement from the previous fiscal year, where the deficit stood at 6.1%. The reduction is attributed to various economic reforms and strategic financial management by the Egyptian government, aimed at enhancing revenue generation and controlling expenditures.
Egypt’s government has implemented a series of economic reforms to boost revenue and reduce the deficit. One of the key measures was the digitization of processes, which has significantly improved tax administration efficiency. As a result, tax revenues have surged to LE 1.4 trillion, representing a growth rate of 36%. Additionally, non-tax revenues have also seen a remarkable increase, totaling LE 778 billion, driven by strategic deals such as the Ras El Hekma agreement.
The growth in general revenues over the past 11 months has reached LE 2.2 trillion, with a growth rate of 73.7%. This impressive performance is a testament to the government’s commitment to expanding the tax base and enhancing revenue collection mechanisms. The primary surplus achieved during this period is LE 822 billion, equivalent to 5.87% of the GDP, a significant rise from the previous year’s surplus of LE 116 billion.
Strategic Expenditure Management
On the expenditure side, the Egyptian government has focused on strategic allocation of resources to key sectors. General expenditures during the mentioned period rose to LE 2.7 trillion, with a growth rate of 43.2%. Despite global economic challenges, the government has prioritized funding for the education and health sectors. The education sector received LE 226 billion, marking a growth rate of 20%, while the health sector’s financing increased by LE 156 billion, indicating a growth rate of 31.9%.
To support the most vulnerable segments of society, the government allocated LE 467 billion for support, grants, and social benefits, reflecting a growth rate of 26%. Wages expenditure also saw an increase, reaching LE 467 billion, with a growth rate of 27%. Furthermore, the government spent LE 119 billion on subsidies for commodities, and the Takaful and Karama program received LE 32 billion, experiencing an annual growth rate of 52%.
Investment and Debt Management
In terms of investments, the volume of investments funded by the state treasury decreased by 8% during the period from July to May 2024, amounting to approximately LE 179 billion. This reduction is part of the government’s strategy to maximize private sector involvement in driving investments. The Egyptian government has set a medium-term goal of reducing the debt service bill to 30% of general expenditures, aiming to decrease the debt burden and reach a debt level of 80% by June 2027.
Additionally, LE 185 billion of the insurance and pension fund’s dues were paid to the state treasury. This move is part of the broader strategy to manage the country’s debt and ensure financial stability. The government’s efforts to control expenditures and enhance revenue generation have been pivotal in achieving the significant reduction in the total deficit.
