Egypt.. The government agrees to a 3-month austerity plan and a statement reveals the details

The Egyptian Council of Ministers announced, on Thursday, that it had approved a draft decision on rationalizing public spending in the entities included in the state’s general budget and public economic bodies for the current fiscal year, and rationalizing the electricity consumption of these entities by 20%, for a period of 3 months. The Egyptian government confirmed in a statement that the approval of the draft resolution comes in light of what we are witnessing of the current events taking place in the Middle East region, and the necessity of rearranging spending priorities to confront the negative effects of this crisis.

The draft decision stipulated a set of general controls and rules to rationalize public spending, as the controls indicated that the provisions of this decision apply to all budgets of entities included in the state’s general budget (administrative apparatus / local administration / public service bodies) and public economic bodies, for a period of 3 months from the date of implementation of this decision unless a decision is issued to extend its implementation, and that the rationalization rules stipulated in this decision must not affect the performance of the entities addressed by its provisions for the services they perform and the role assigned to them. According to a statement by the Egyptian Council of Ministers on its Facebook page, the general controls included “an emphasis on postponing spending on any needs that do not bear the nature of extreme necessity. With regard to dealing in foreign exchange, it is necessary to obtain the approval of the Ministry of Finance to authorize spending with the foreign component on any aspect of exchange, after coordination with the Central Bank and the relevant and competent authorities.” The controls also included the government’s approval “not to take any decisions that would increase expenditures in any section of the state’s general budget, in accordance with the detailed rules contained in this decision, except after prior coordination with the Ministry of Finance and after presentation to the Council of Ministers.”

The controls emphasized the importance of directing all entities involved in the state’s general budget to work on developing their own resources to meet part of their needs to relieve pressure on the appropriations that are financed by a public treasury deficit, which are provided through various borrowing means. They also stressed the rationalization of all travel outside the country except for extreme necessity, and after the approval of the Prime Minister or in the event that the inviting party bears all travel costs and after the approval of the competent authority. The controls contained in the draft resolution obligated all parties to reduce electricity and lighting consumption by 20%, compared to the average actual consumption rates during the same period of the previous fiscal year 2025/2026, and obligated all parties to reduce fuel consumption allocated to government vehicles by no less than 30%, prohibiting the disbursement of credit balances except for the purposes for which they are allocated and taking into account the prohibited items mentioned in this decision, and emphasizing postponing/slowing down the implementation of national projects. Intensive fuel consumption (diesel, diesel, and gasoline) on an exceptional basis for at least 3 months, provided that the situation is evaluated successively with the possibility of extending it if the crisis continues, while developing an implementation plan to reduce national projects’ consumption of electricity by 20% and fuel by 30%.” According to the statement, the law does not apply to the Ministry of Health and Population and its affiliated agencies, university hospitals, health agencies, and national security purposes, in addition to interest and loan repayment installments listed in the agencies’ budgets, and the appropriations listed. With the budgets of the authorities for the treatment of workers and non-workers (such as students), and the subsidies thatDisbursed to workers, pensions, solidarity and dignity, and all financial allocations listed to support food supplies.

The draft resolution stipulates that “it is prohibited to spend on advertising costs and expenses, expenses for parties and receptions, expenses for public affairs and relations, and the appropriations allocated for cultural relations abroad and supplies for sports games, and to prohibit spending on participation in conferences at home and abroad without obtaining prior approval, as well as renting tents and chairs, and to prohibit spending on a transportation allowance for travel abroad, transportation costs and public transportation by other means for traveling abroad, and expenses for holding exhibitions and conferences at home and abroad.” The draft resolution also prohibited “spending on awards and medals, and stipulated that, in contrast to the above, all parties shall work to rationalize any aspects of disbursement that they deem possible.”

The decision also included postponing the implementation of newly listed projects in the current fiscal year, and prohibiting the conclusion of any contracts on these projects, whether by direct order or public tenders, until 6/30/2027, unless their implementation has been contracted by the date of issuance of this decision, and not starting any new projects in the current fiscal year, and giving priority to completing projects that are nearing completion and expected to be completed during the fiscal year 2026/2027, with a focus on the necessary and urgent investment needs alone. Exceptions to this are - other than what the Ministry of Planning and Economic Development deems appropriate in accordance with emergency circumstances - presidential assignments and directives, assignments of the Prime Minister, compensation for expropriation, previous years’ dues, investment fees for which approval is issued by the Ministry of Finance, projects of the “Decent Life” presidential initiative, the health, pre-university and interior education sectors, the drinking water and sanitation sector, and projects related to national security, water and food security, cybersecurity and energy security.

The draft decision stipulated not to contract for the purchase of passenger cars until 6/30/2027, and not to contract for any work that might result in the need to procure foreign currencies, or to start any project through the local component that might result in the need for external borrowing or procuring an additional foreign component. All entities involved in the state’s general budget also work to rationalize any aspects of spending that they deem possible.