Key facts
- Egypt's budget deficit reached EGP 1.12 trillion in July-April, a 0.2% year-on-year increase.
- The deficit represented 5.3% of the country's GDP during the period.
- Tax revenues surged 29% year-on-year across all categories.
- Non-tax revenue increased by 70% year-on-year due to EGP 168 billion from the Alam El Roum Project.
- Interest payments rose 22% year-on-year, accounting for 92% of tax revenues.
- Spending on subsidies increased by 14% year-on-year.
Egypt's budget deficit expanded to EGP 1.12 trillion in the July-April period, marking a 0.2% year-on-year increase and representing 5.3% of the country's gross domestic product. This fiscal outcome was achieved despite robust growth in tax revenues, which climbed 29% year-on-year across all categories, reflecting recovering economic activity, improved foreign exchange liquidity, and higher inflation. Non-tax revenues saw a substantial jump of 70% year-on-year, largely due to EGP 168 billion in receipts from the Alam El Roum Project.
The government implemented measures to control the deficit, including capping infrastructure spending, broadening the tax base, and enhancing tax collection. However, interest payments surged by 22% year-on-year, consuming 92% of tax revenues and remaining a significant credit concern. Spending on subsidies also rose by 14% year-on-year, with the ongoing conflict in Iran expected to add EGP 50 billion in monthly costs unless fuel prices are increased. Egypt is actively seeking to extend debt maturities, diversify financing sources, and aims to reduce its public debt-to-GDP ratio to 80% by 2027.