Egypt approves budget amid privatisation drive, economic crisis

Egypt is dealing with an economic crisis, with the government seeking investments to meet its foreign debt obligations.

Egypt will be allocating 127.7 billion Egyptian pounds ($4.14bn) for its food subsidy programme for the upcoming fiscal year beginning on July 1, up from 90 billion Egyptian pounds ($2.92bn) a year prior, as the most populous Arab nation grapples with an economic crisis.

About a third of Egypt’s 105 million people live in poverty, according to government figures, and many Egyptians depend on the government to keep basic goods affordable through state subsidies and other similar schemes.

The country’s parliament approved its three-trillion-pound budget ($97.41bn) for 2023-2024 on Monday, according to a document seen by Reuters news agency on Tuesday.

Egypt has budgeted for a total expenditure of 2.991 trillion pounds ($94.49bn) and revenues of 2.142 trillion pounds ($69.55bn) for the year ahead.

The government has also budgeted for an oil price of $80 per barrel of Brent crude.

The budget estimates real gross domestic product (GDP) growth of 4.1 percent and an average inflation rate of 16 percent.

Egypt’s finance ministry estimates it will need 8.25 million tonnes of wheat for the subsidy programme. It is one of the world’s biggest wheat importers and its economy has taken a hit since Russia invaded Ukraine last year, as Ukraine is one of the world’s largest wheat exporters.

Concurrently, talks are under way for the sale of a large power plant in Beni Suef, south of Cairo, a possible $2bn deal with Actis LLP and Edra Power Holdings Sdn Bhd that could be a significant boost to the country’s economy, Bloomberg reported.

Since Russia’s invasion, Egypt’s currency has depreciated by nearly half, and foreign investors have pulled more than $20bn out of Egyptian treasury markets.

Last April, Egypt announced a plan to attract investments amounting to $10bn in the next four years, privatisations it also needs to meet a number of foreign debt obligations in the next few months.

In February, Prime Minister Mostafa Madbouly disclosed a list of more than 30 state-owned companies to sell to investors within the year.

On Tuesday, the country signed a $460m financing agreement for Cairo’s metro lines with South Korea.

Last month, the Egyptian finance ministry announced the selling of a 9.5 percent stake in state-controlled Telecom Egypt for 3.75 billion Egyptian pounds ($122.4m) in the move to push forward the government’s privatisation programme.

Amid the continuing crisis, Egypt has been relying on imports of basic foods and fuels.

Egyptian Supply and Internal Trade Minister Ali Moselhy said on Monday that discussions are continuing with Russia, China and India regarding payments for imports using currencies other than the dollar.