On April 23, 2023, the Egyptian Ministry of Finance announced a 48.8% increase in funds dedicated to subsidies and social protection in the budget for fiscal year 2023/2024, which begins in July, up to EGP529.7 billion from EGP358.4 billion in the current budget, with the aim of alleviating the impact of the global inflationary wave. The increased support goes largely to foodstuffs and petroleum products, followed by exports, health insurance, social housing, and pensions.
The expanded social protection is expected to be financed by domestic and foreign borrowing, increasing debt and thus putting additional pressure on the Egyptian pound. The increase of EGP171.3 billion (about USD5.54 billion) comes as inflation surged to a five-year high of 32.7% in March 2023.
In the new budget plan, the government expects inflation to fall to 16% in the coming fiscal year, which is much lower than the current rate, despite projections that inflation will continue to climb due to another impending devaluation of the pound, and an increase in the import bill and the cost of borrowing. Many of the numbers in the draft budget will therefore change, ultimately bringing a new, different budget.
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