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Egypt’s budget deficit falls to 2.1% in first quarter of the year

Egypt’s budget deficit — which occurs when government spending surpasses the revenues that a state generates – receded to 2.12% of the national GDP during the first quarter of the current fiscal year, down from the 3.26% recorded in the previous financial year ( FY 2023-24). This was driven by a rise in tax revenues — which saw a 45% YoY hike – and a decline in debt interest rates, the CBE noted in its latest report. The budget deficit currently stands at some EGP 361.8 billion.

The specifics:

State revenues saw a 40% hike to EGP 470 billion, driven mainly by a significant rise in tax revenues, which totaled EGP 413.3 billion. At the same time, government expenditures increased by 4.6% YoY to about EGP 828 billion.

Government interest payments decreased by 5.3% during the first quarter of this year to around EGP 452 billion . Meanwhile, the state’s allocated support packages and grants increased by nearly 40% to EGP 133 billion.

The country’s primary surplus also grew 0.53% in FY 2024-25, compared to a surplus of 0.15% a year earlier.

In other news on government spending:

The cabinet noted yesterday that it aims to increase the percentage of green financing to 50% of total public investments in 2024/2025, compared to about 15% in 2020/2021.

This comes as the government updated its renewable energy generation target for 2040, aiming to have clean energy sources account for 60% of the country’s electricity mix. Egypt’s electricity output is expected to stand at 120 GW by then.

Fitch strengthens Egypt’s credit rating amid heightened confidence in our economic outlook

Fitch Ratings upgraded Egypt’s long-term foreign-currency Issuer Default Rating (IDR) from “B-” to “B”, with a stable outlook. The global ratings agency cited increased confidence in our economy as the impact of the government’s economic reform program becomes more pronounced and cited expectations that regional tensions will subside in the coming period.

The details:

The upgraded rating is attributable to a rise in international reserves during the first nine months of the year to USD 44.5 billion compared to USD 11.4 billion in March, and also comes on the back of a recovery in our net foreign asset position, which has nearly balanced out from a deficit of USD 17.6 billion in January.

USD 24 billion in additional foreign currency from the Ras El-Hekma deal fueled this enhancement.

Additionally, non-resident ownership of domestic debt has seen a rise of around USD 17 billion since February.

Other news from Fitch:

The credit rating agency expects foreign direct investments flowing into Egypt to reach an average of USD 16.5 billion in the next two fiscal years, driven by fresh investments from Saudi Arabia and the Ras El-Hekma project.

Remember:

In its country risk report for the fourth quarter of the year, Fitch maintained its forecast for economic growth at 4.2% in the current fiscal year. This comes on the back of higher investment, a recovery in the manufacturing sector, and an expected end of the war on Gaza by the end of 2024.

What else is clapping?

Egypt’s automotive sector saw a 3.4% YoY decline in sales volume in September 2024. The total market volume reached 9.5 thousand units sold that month.
The Egyptian banking system saw a 6% increase in its net foreign asset surplus, reaching USD 10.31 billion in September, compared to USD 9.7 billion in August.
Misr Hotels Company recorded an 84% YoY growth in net profit to EGP 349.3 million during the first quarter of fiscal year 2024/2025. The company’s revenues increased by 52.8% to EGP 458.9 million during the same period.
Marseille Almasreia Alkhalegeya For Real Estate Investment turned to losses during the first nine months of the year, recording net losses EGP 26.841 million compared to EGP 33.699 million in profits during the same period last year.