Back to the complete issue
Wednesday, 4 March 2020

Egypt mulls increasing budget allocations for subsidies in FY2020-2021

BUDGET WATCH- Gov’t mulls increasing subsidy allocations next fiscal year: The government is in talks with the House of Representative to discuss raising allocations for commodity subsidies to at least EGP 96 bn in the FY2020-2021 budget, from EGP 89 bn in the current fiscal year, Supply Minister Ali El Moselhy tells Al Mal. The increase will be necessary to cover the newborns that will be added to the country’s subsidy rolls and to raise each beneficiary’s monthly allowance, El Moselhy said. The government is considering increasing monthly allowances to EGP 200, from EGP 140 currently.

Over five mn newborns born between 2006 and 2015 will be added to the subsidy rolls soon, after being registered last year, El Moselhy said. The addition was projected to increase government spending on subsidies to EGP 91 bn in FY2019-2020, so it’s likely that the ministry will wait to finish purging Kramers from the subsidy rolls first. The purge has so far seen the removal of 8 mn beneficiaries, of whom 1.8 mn were brought back on.

What does this mean for the anticipated switch to cash subsidies? El Moselhy had been working to gauge opinions on the proposed system of doling out cash for food subsidy recipients in place of the current system of in-kind subsidies using ration cards. At the time, he noted that he would first meet with MPs to discuss how to make the move. El Moselhy hasn’t given any signal on when the change would happen but Giza Chamber of Commerce board member Osama El Rifai had said in January it may happen within two months. The Cash Subsidies Act, which would govern this new system, had been sent to the House of Representatives back in July 2019.

The new system would save state coffers some EGP 26.5 bn, or 30-35% of the subsidies bill in its first year, with that figure expected to rise to 40% in the second year of its implementation, sources had suggested.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.