Finance Minister Mohamed Maait has announced that Egypt is on a comprehensive trajectory to bolster its economic climate. This includes implementing decisive, proactive, and stimulating reforms to swiftly rejuvenate economic dynamics and foster enduring growth. Maait emphasized that the Ministry is actively developing multiple facets of financial policy to improve the economic landscape, notably through recent updates to the Unified Public Finance Law, endorsed by President Abdel Fattah Al-Sisi. These amendments are instrumental in propelling economic advancement and achieving societal goals.
According to a Ministry of Finance communiqué, Maait highlighted that the modifications to the Unified Public Finance Law establish legislative frameworks that effectively manage the deficit and debt-to-GDP ratios. State public finance metrics will be derived from the general government budget’s income and outlays, encompassing all state and local economic, service, and administrative entity budgets. Consequently, the total general government expenditure is projected at EGP 6.6 trillion, with anticipated revenues of EGP 5.3 trillion for the fiscal year 2024/2025.
Furthermore, the Minister elucidated that the law aims to alleviate debt and its associated burdens across all general government sectors, targeting a debt-to-domestic product ratio of 80% by June 2027. The legislation mandates a ceiling for the general government’s debt and its proportion to the domestic product, a threshold that may only be surpassed under national exigencies, subject to the endorsement of the President, the Cabinet, and the House of Representatives.
Maait also noted that half of the proceeds from the IPO initiative will be allocated to directly curtail government debt, while concurrently extending the debt’s maturity in the forthcoming phase. He underscored the importance of adhering to the general government debt ceiling when assessing state public finance indicators.
The unified public finance law is designed to recalibrate the state’s economic direction to align with the forthcoming fiscal year’s budget objectives, including garnering additional resources to spur economic growth by concentrating on productive and export-oriented sectors, establishing a foundation for sustainable development, job creation, attaining a primary surplus exceeding 3.5% of GDP, and diminishing the overall deficit to 6% over the medium term.
Maait also revealed that the state’s total public investment cap is set at EGP 1 trillion for the fiscal year 2024/2025. This cap is intended to provide leeway for private sector engagement, in harmony with the state’s initiatives to amplify its role in economic and developmental pursuits.
He asserted that within the next six years, there will be a transformation of the operational and administrative frameworks and oversight mechanisms to facilitate the adoption of a program budget and performance system. This evolution aims to guarantee the judicious and impactful allocation of state resources, fulfilling the objectives of the overarching economic and social development plan, and the state’s strategic aspirations to enhance citizen welfare and service delivery.
In conclusion, Maait stated that the Unified Public Finance Law mandates that administrative bodies are prohibited from enacting or modifying any legal, regulatory, or decisional instruments, or from entering into contracts, agreements, or initiatives that incur financial obligations not accounted for in the general budget. Ministry of Finance representatives within accounting units are barred from sanctioning or disbursing funds without verifying fiscal compliance and legal authorization.
