The Financial Council hedging against the risks of basic commodities in the draft budget for the next fiscal year


Set accurate monthly budget targets to ensure the sustainability of public finances and debt

The Ministry of Finance aims, in the draft budget for the next fiscal year, to use hedging mechanisms to protect the budget from the change and deviation of basic commodity prices compared to the original assumptions in the budget that are being prepared and estimated in light of the latest available estimates at the time of preparing the general budget.

In the draft budget for the fiscal year 2021-2022, the Ministry of Finance estimated the price of a barrel of oil at $ 60 a barrel, and the average purchase price of wheat at about $ 255 per ton.

The Ministry is also working to prepare an integrated system to manage and follow up dealing with financial risks in a flexible and effective manner, which contributes to the sustainability of public finances by preparing monthly targets for the budget accurately to ensure that any risks associated with the ability to achieve public targets and public debt are quickly identified.

It also includes the financial risks of the budget for the next fiscal year, seeking to prepare a strategy for dealing and reducing government guarantees, to ensure that borrowing will be directed to projects that are feasible and the borrower’s ability to properly service this debt.

The Ministry of Finance is also working on implementing an automatic pricing mechanism for petroleum products in a way that allows flexibility in pricing petroleum products to protect the general budget and the General Petroleum Corporation from fluctuations in exchange rates and international Brent prices.

The draft financial statement said that the depreciation of the pound against the dollar by 50 piasters during the fiscal year negatively affects the first surplus in the budget by 2 billion pounds, or about 0.04% of the gross domestic product.

The article “Finance” hedges against commodity risks in the draft budget for the next fiscal year, which was written in the Al-Borsa newspaper.