Egypt plans spending controls to cushion impact of regional tensions

Egypt is preparing measures to rationalise government spending and create fiscal space to address the economic fallout from escalating regional tensions, Prime Minister Moustafa Madbouly said on Monday, while pledging to protect funding for essential services and productive activities.

Madbouly reviewed a proposed framework for governing and rationalising public expenditure at a meeting attended by Finance Minister Ahmed Kouchouk, Planning and Economic Development Minister Ahmed Rostom, Deputy Finance Minister for Fiscal Policies Yasser Sobhi, and officials from both ministries.

The framework, being prepared jointly by the Finance and Planning ministries, is intended to give the government flexibility to respond to different potential scenarios as regional tensions intensify, Madbouly said.

Proposed measures include limiting government consumption of fuel and electricity, building on steps introduced when the crisis erupted, and reducing spending on advertising and promotional activities across government entities.

Madbouly stressed the need to prioritise production and manufacturing and strengthen exports to foreign markets.

The officials at the meeting said the proposed framework covers various government spending items and sectors. A final version is due to be submitted to the Cabinet for consideration.

The plan also seeks to establish an integrated framework for fiscal sustainability, including precautionary measures to help state entities prepare for different crises. The measures would apply across government bodies while ensuring the continuity of economic and productive activity, the statement said.

The government also pledged to maintain adequate funding to secure strategic essential commodities for sufficient periods, meet the needs of the petroleum and electricity sectors, and ensure the continued provision of basic services to citizens.

The statement did not specify the targeted spending reductions or the amount of fiscal space the proposed measures are expected to generate.