Egypt’s parliament – the House of Representatives – began discussing the country’s state budget (2019/20) and development plan on Saturday.
Minister of Finance Mohamed Mait told MPs in a plenary session that the government will do everything possible to protect poor and limited income classes against the hardships of economic reform.
“The government vows to take greater social protection measures to help poor and limited income classes and improve their daily life conditions,” said Mait, revealing that “in the coming year, the government has decided to earmark EGP 89 billion in allocations to commodity goods, including bread, EGP 82 billion to pension funds, and EGP 18.5 billion to the Takaful and Karama programmes.”
Mait also indicated that while salaries of state employees will increase by EGP 30 billion (or from EGP 270 billion in 2018/19 to EGP 300 billion in 2019/20), pensions will go up by EGP 28.5 billion.
Minister Mait’s statement came in response to a report prepared by parliament’s budget and planning committee on the government’s 2019/20 state budget and development plan.
Head of the committee Hussein Eissa said that Egypt’s IMF-inspired economic reform programme has achieved great progress since it began in November 2016.
“While this reform has pushed the economic growth rate to 5 percent for the first time, unemployment fell to 9 percent, and inflation dropped to 13.8 percent in March 2019,” said Eissa, adding that “the country’s foreign exchange reserves have hit a record of EGP 44.1 billion at the end of March, an amount which covers Egypt’s imports for a record of seven months.”
The committee’s report said it expects that economic growth will continue to rise to reach 6 percent next year (2020), as overall investments are targeted to increase by 27 percent.
The report said that Egypt’s new budget is estimated at EGP 1.575 trillion.
“This is the biggest budget in Egypt’s history,” said Eissa, adding that “while expenditure is valued at EGP 1.574.559 trillion, revenues are targeted to reach EGP 1.134.424 trillion.”
According to Eissa, the above figures mean that there will be a monetary deficit of EGP 440.135 billion and an overall budget deficit of EGP 445.140 billion.
The report praised the finance ministry’s keenness to earmark greater allocations to social protection programmes, improve the daily lives of ordinary citizens, slash public debts and cut the budget deficit, and boost sustainable development projects.
However, the report recommended that the government takes greater measures to reduce inflation to 10.4 percent, cut the budget deficit to 7.2 percent of GDP, boost tax revenues by 14 percent, and continue on the road of implementing structural economic reforms.
“We also hope that the government will do its best to increase non-tax revenues to exceed the current figure of EGP 278 billion,” said the report.
The report urged the government to do more to rationalise public spending.
“We stress that public expenditure, excluding interest rate payments, should not exceed EGP 1005.4 billion, a measure which could reduce the ratio of public debts to GDP by 2 percent,” said the report.
Eissa said that the government should also do more to promote investment opportunities in provincial governorates, particularly the poor ones in Upper Egypt.
“This means that it should move faster to promote basic infrastructure projects in different governorates to be able to receive investments and boost economic projects,” said the report, indicating that “road development projects, and oil and natural gas exploration investments, particularly near the Suez Canal area, are highly important in the coming period in terms of boosting economic growth and reducing unemployment.”
The report recommended that the private sector contribute more to investments, particularly in labour-intensive and service projects.
“Besides, the government should move faster to widen the scope of the ownership of shares of government companies via the stock market,” said the report, adding that “this is an important step to activate the securities market and attract more private investments.”