CABINET WATCH- Council of Ministers signs off on FY2019-20 state budget: Cabinet approved yesterday the draft FY2019-20 state budget, Prime Minister Moustafa Madbouly, Finance Minister Mohamed Maait, and Planning Minister Hala El Said told reporters yesterday, according to Al Masry Al Youm. The ministers said spending priorities include improving the quality of public services, shoring up the social safety net, and creating jobs. The total size of the budget was not disclosed, but a senior government official had previously told Enterprise that the draft budget sees spending at EGP 1.5 tn. Other confirmed projections:

• GDP growth registering 6% by June 2020;
• Budget deficit of 7.2% of GDP, down from 8.4% in the current fiscal year;
• Primary budget surplus of 2%;
• Reducing public debt to 89% of GDP, with an eye to bringing that figure down to 80% by FY2021-22;
• Unemployment falling to 9.1% and population growth slowing to 2.3%.

Egypt also aims to cut spending on petroleum products by 42% to EGP 52 bn, government sources told the local press. Fuel hedging should begin with the coming fiscal year with plans for other basic commodities to eventually follow suit.

SMART POLICY- The Madbouly Cabinet also signed off on the SMEs Act, which outlines tax and non-tax incentives for SMEs and other companies or bodies that support them, according to a statement. The statement does not provide further details on the incentives, which are designed to encourage SMEs to go legit and join the formal economy. Sources previously told us that the government was mulling tax incentives to convince businesses to go legit, including offering an 85% exemption from their tax burden for three years after registering and exempting them from 50% of taxes owed retroactively from the date of registration.