Egypt’s Finance Minister, Mohamed Maait, announced that the government aims to reduce the debt service bill to 30% of public expenditures in the medium term. This is part of a broader strategy to lower the country’s debt-to-GDP ratio to 80% by June 2027, he said in a Tuesday press statement.

Maait also revealed that the financial performance of the state’s general budget for the 11-month period from July 2023 to May 2024 exceeded targets, despite global and regional challenges, including the ongoing conflict in Ukraine and the recent tensions in Gaza and the Red Sea region.

The initial surplus for the 11-month period reached EGP 822bn, representing 5.87% of GDP, significantly higher than the EGP 116bn (1.15% of GDP) recorded in the same period of the previous fiscal year.

The total deficit declined to 3.6% of GDP, down from 6.1% in the previous fiscal year, despite high inflation, rising interest rates, exchange rate fluctuations, and substantial spending on subsidies and debt service.

Public revenues during this period grew by 73.7% to EGP 2.2trn, driven by a 36% increase in tax revenues, reaching EGP 1.4trn.

This growth was attributed to the implementation of digital systems, expansion of the tax base, and improved tax administration efficiency. Additionally, non-tax revenues surged by 258% to EGP 778bn, largely due to the Ras El-Hekma deal.

Public expenditures also increased by 43.2% to EGP 2.7trn, primarily due to the higher debt service bill resulting from rising interest rates and increased spending on social protection programs, wages, healthcare, and education. Spending on education rose by 20% to EGP 226bn, while healthcare spending increased by 31.9% to EGP 156bn.

To alleviate the burden of inflation on lower-income groups, the government increased spending on support, grants, and social benefits by 26% to EGP 467bn.

Spending on wages also grew by 27% to EGP 467bn, following recent salary increases for state employees. Subsidies for food commodities reached EGP 119bn, and spending on “Takaful and Karama” programs increased by 52% to EGP 32bn. Additionally, EGP 185bn was allocated to repay the dues of the Insurance and Pensions Fund.

Maait concluded by noting that the volume of investments financed by the state treasury decreased by 8% to EGP 179bn during the July-May period, allowing for greater private sector participation in the economy.

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