IDSC released on Monday a new report reviewing important new budget targets. The state targets EGP 1.5 trillion in revenues in the next year compared to EGP 2 trillion in expenditures.
The report said: “Public investments are expected to reach EGP 376 billion with 9.6 annual growth, with an increase in environmentally friendly projects by 50%. Wages will have a significant impact in the new budget and are expected to reach EGP 400 billion with an increase of EGP 43bn, for employees to face the rising cost of living economic conditions.”
Decreasing the debt rate from essential targets in the new budget, IDSC anticipated that there would be a reduction of the overall deficit to 6.1% of GDP, compared to 12.5% in 2016, the report noted.
The latest report came after the central bank of Egypt unexpectedly increased its key overnight deposit rate by 200bps to 11.25% in its May 19th meeting.
It is the second increase in borrowing costs since March as the country aims to tackle soaring inflation and restore the allure of its local debt to foreign investors amid a global wave of monetary tightening, according to economic reports.
Consumer-price growth in the North African nation surged to 13.1% in April, the highest level in almost three years as food costs spiked due to the war in Ukraine. As a major food importer, Egypt is racing to deal with record grain prices fueled by the conflict.
The Monetary Policy Committee reiterated that the path of future policy rates remains a function of inflation expectations rather than of prevailing inflation rates. The overnight lending rate was also increased to 12.25% from 10.25%.