The Finance Ministry will set oil prices at USD 80 a barrel in the FY 2022-2023 budget, according to a document seen by Bloomberg Asharq, coming in at the bottom range of the USD 80-85 a barrel range signaled by Vice Minister of Finance Ahmed Kouchouk last month.

This is significantly higher than last year — but below some analysts’ expectations: The current FY 2021-2022 budget had assumed an average Brent crude price of USD 60 but we’re currently paying almost double that thanks to the supply squeeze brought on by war in Ukraine. Brent is now trading at more than USD 112, up 45% from the start of the year, and some analysts are expecting it to remain above USD 100 a barrel for the remainder of this calendar year as the spillover effects from the Ukraine conflict continue to weigh on an already tight market.

We’ll also be spending a lot more on fuel subsidies: The government is also upping its petroleum product subsidy spend by more than 50% to EGP 28 bn, up from this year’s EGP 18.4 bn.

The gov’t is expecting the int’l wheat markets to calm slightly: Next year’s budget assumes an average price of USD 330 per ton of wheat — substantially higher than the USD 255 per ton in this year’s budget, but lower than current prices after Russia’s war blocked Ukrainian exports. The government in early March said rising wheat prices would cost it an additional EGP 15 bn this fiscal year, penciling in the cost at around USD 350 per ton. US wheat futures rose back above USD 11 per bushel last week, and are up 45% since the start of the year.

No plans to significantly adjust food subsidy spending: The government is expecting to spend some EGP 90 bn on food subsidies next fiscal year, compared with EGP 87.2 bn this fiscal year. Plans to overhaul Egypt’s costly bread subsidy system have been put on hold after the price of the food staple rose sharply in March, forcing the government to step in with price caps on unsubsidized bread.

Rising wheat prices are forcing Egyptian companies to get inventive

Wheat alternatives gain traction among local food producers looking to cut costs: Egyptian pasta-maker Egyptian Swiss Group — the maker of pasta brands Zeina and Rawaa — is “experimenting” with rice, corn, and lentil flours as a substitute for wheat, as the war in Ukraine continues to drive price inflation for the grain, Bloomberg reports.

“The price is the name of the game,” Egyptian Swiss Group General Manager Ahmed El Sebaie was quoted as saying. The food manufacturer joins firms across Africa exploring local alternatives to imported wheat, which has become around 40% more expensive so far this year.

State grain buyer GASC has purchased around 13% less wheat so far this year compared with the same point in 2021, according to Bloomberg. Egypt usually sources some 80% of its wheat imports from Russia and Ukraine, but the government has pivoted to focus on the local harvest amid the price spike.