EXCLUSIVE- FinMin expects subsidy spending to come in EGP 13 bn below budget this fiscal year thanks to lower oil prices: The Finance Ministry has revised downwards to EGP 315 bn from EGP 328 bn its total subsidy expenditure forecast for the current fiscal year, two senior officials told Enterprise. The downward revision comes as the average price of crude in the first six months of the current fiscal year fell below the USD 67 / bbl set in the budget.

The drop in oil prices bolstered government finances, allowing the Finance Ministry to offset higher wage costs — which have been revised upward by EGP 4 bn to EGP 270 bn for 2H2018-2019 — and rising food prices. The need for additional borrowing has been reduced and the target for interest payments by the end of the fiscal year remains unchanged at EGP 541 bn. Lower oil prices also allowed the government to allocate EGP 88 bn for commodity spending during 2H2018-2019, or about EGP 1 bn more than originally budgeted.

FinMin sets aside EGP 68.2 bn for ‘rainy day’ fund in FY2019-2020: The ministry has for the first time set aside EGP 68.2 bn in contingency funds to hedge against the effect of any sudden upticks in global commodity prices or average interest rates in the FY2019-2020 budget, according to a document seen by Enterprise. The move comes as Egypt faces a substantial debt service burden. The funds include EGP 32.2 bn for energy subsidies and EGP 21.2 bn for public wages, with the remainder reserved for unexpected goods, services, or investment needs. “The provision [for a contingency fund of this size] is brand new,” a government official told us, pointing out that the government only set aside EGP 11 bn in the current fiscal year.