The finance minister says Egypt would look for soft loans to help pay for its deficit in 2024–2025

In an effort to reduce a chronic budget deficit in the upcoming year, Egypt intends to explore new debt instruments and the domestic debt market, the country’s finance minister announced on Tuesday.

According to Finance Minister Ahmed Kouchouk, the 2023–24 fiscal year, which concluded on June 30, had a deficit of 505 billion Egyptian pounds ($10.3 billion) out of a budget of 3.016 trillion pounds.

According to Kouchouk, food subsidies in Egypt grew by 10% to 133 billion pounds during the 2023–2024 fiscal year, while gasoline subsidies jumped by 31% to 165 billion pounds.

The increases were mostly caused by the 27.5% increase in consumer prices that occurred in the year ending in June.

“We are planning to continue relying on the local debt market and are considering new debt instruments and expanding existing tools such as variable rate treasury bonds, local market green bonds and local sukuk,” Kouchouk said at a press conference.

Apart from entering a few new markets, Egypt aimed to stay out of the global debt market by pursuing soft loans and help from other countries on a bilateral and multilateral basis. The foreign debt of the nation is 13 years on average, “which is very good for us,” he remarked.

As it struggles with significant subsidies, Egypt has hiked the price of bread and gasoline twice. These actions were required under a $8 billion IMF financial package that was inked in March.

Additionally, Egypt is under pressure from the IMF to raise taxes in its 2025–2026 budget.

IMF Ivanna Vladkova Hollar stated last week that “Egypt needs tax resources to be able to spend on priority needs; that is a priority reform that we will be discussing at the time of the fourth review.”

According to Kouchouk, total spending in 2023–2024 was 3.016 trillion pounds, tax income was 1.63 trillion pounds, and all other revenue was 871 billion pounds.

In the fiscal year that began on July 1, Egypt intends to spend 3.9 trillion pounds and earn 2.6 trillion pounds, according to a March statement by former finance minister Mohamed al-Maait.

$1 is equal to 49.2010 Egyptian pounds.