HomeEconomyEgypt orders ministries to cut spending
By Economy Middle East
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January 11, 2023 12:17 pm

Egypt orders ministries to cut spending

Due to a foreign currency shortage
Egypt spending cut
Egypt banknotes

Egypt’s government has directed ministries to reduce non-essential spending until the end of the fiscal year in June in order to deal with ongoing currency pressure and rising inflation.

The decision, dated January 4 and published in the official gazette this week, includes the postponement of any new national project heavily reliant on foreign currency, as well as the requirement that ministries seek finance ministry approval on foreign currency expenditure.

The health, interior, foreign, and defense ministries are exempt, as are agencies responsible for spending on subsidized food and energy.

Travel, marketing, and conferences, as well as grants and employee training, are examples of non-essential spending. The decision did not specify how much money could be saved.

Read more: IMF does not see inflation in Egypt waning before 2024

In recent years, Egypt has spent heavily on large infrastructure projects. These include a new capital city east of Cairo and extensive road construction, both of which aided economic activity during the COVID-19 pandemic but have also been criticized.

Moreover, Egypt has continued to face a foreign currency shortage despite allowing the Egyptian pound to fall sharply in recent months, most recently last week.

Inflation exceeds 21%

 

Egypt’s inflation remains high, despite a dramatic drop in its currency, as many Egyptians struggle with price increases, according to the latest official figures.

The Central Agency for Public Mobilization and Statistics (CAPMAS) reported that annual inflation was 21.9 percent in December, up from 19.2 percent in November. This compares to 6.5 percent in December 2021, before inflation exploded in 2022 as a result of Russia’s war on Ukraine, which shook the global economy.

Egypt’s prices rose across the board, from food and medical services to housing and furniture. In December, food prices rose by 4 percent on average, with fruits and dairy products leading the way with 7.6 percent and 6.4 percent increases, respectively.

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