Spending targets in Egypt’s 2026-2027 draft budget point to a smaller increase in subsidies than this year’s rise, despite warnings from President Abdel Fattah El-Sisi and the government about the severity of the fallout from the US-Israeli war against Iran.
Both El-Sisi and the government have recently signaled tougher economic conditions ahead. Speaking at the Egyptian Family Iftar on Saturday, El-Sisi defended the latest fuel price hikes, calling them the least costly option for citizens under current conditions and saying the effects of the war would hit everyone without exception.
Finance Minister Ahmed Kouchouk echoed that concern last Thursday, saying reserve allocations in next year’s budget had been raised to the constitutional maximum because of ongoing uncertainty.
A Finance Ministry source familiar with the draft budget, which takes effect in July, told Al Manassa that the ministry’s plan for subsidies, grants, and social benefits in fiscal year 2026-2027 allocates about 845 billion Egyptian pounds (about $16.25 billion), up roughly 103 billion pounds ($1.98 billion) from the previous fiscal year.
Subsidies, grants, and social benefits in the 2025-2026 budget totaled about 742 billion pounds ($14.3 billion), an increase of about 107 billion pounds ($2.06 billion) from the previous budget.
Experts expect inflationary pressures to intensify in the coming period after food production input prices rose alongside the war, while the government’s fuel price increases this month have also pushed up the prices of many goods.
The Finance Ministry source, who asked not to be named, also confirmed reports that the government is moving to raise the minimum wage for public sector workers in the next fiscal year, which starts in July, to 9,000 pounds ($173). The source said the draft budget submitted by the ministry was prepared on that basis. “The final word will be with the president in determining the proposed rate of increase,” the source added.
Kouchouk said at a government press conference last week that pay raises for government employees next year would outpace inflation.
On pensions, the Finance Ministry source said the new draft budget includes a 15% increase. The source added that it could be raised to 20% amid demands for a bigger increase to support pensioners as commodity prices have climbed in recent weeks because of the war’s fallout.
The current social insurance and pensions law stipulates that annual pension increases be linked to inflation, but caps them at 15%, drawing recent criticism from members of parliament as inflation has surged far beyond that level.
