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Saturday, 16 November 2019

Egypt parliament to begin discussing 2018/19 budget on Sunday

A parliamentary report recommends that the government should soon start implementing the second stage of the IMF-inspired economic reform programme

Gamal Essam El-Din , Saturday 2 Jun 2018
Egypt
File Photo: Egypt's Parliament (Photo: Reuters)
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Egypt’s parliament is scheduled to start discussing on Sunday the country's new state budget for fiscal year (FY) 2018/19.

The county's five-year sustainable socio-economic development plan (2017-2022) will be also discussed.

An initial debate on the new budget and development plan was held on 15 April, where Minister of Finance Amr El-Garhy and Minister of Planning, Administrative Reform and Follow-up Hala El-Saeed delivered two statements before parliament.

Salah Eissa, head of the budget and planning committee, told reporters that a report prepared by the committee on the 2018/19 budget and development plan would be submitted to parliament for discussion on Sunday.

"This budget comes within the framework of an economic reform programme that began in November 2016 and has yielded very positive results," Eissa said, adding that "inflation has gone down from 33 percent to 12 percent, foreign exchange reserves rose from $15 billion to $44 billion, unemployment has fallen to 10 percent, and the budget deficit was cut to 8.4 percent."

Eissa said the committee's report recommends that the government continue with implementing the second stage of the IMF-inspired economic reform programme.

"But the report also recommends that the government adopt a new package of social protection that can help poor and limited-income citizens cope with the expected harsh economic measures such as phasing out fuel and power subsidies," Eissa said.

Eissa said that the committee report notes that large budgetary allocations were earmarked to the sectors of education, health, culture and transport.

"The report will present detailed recommendations and proposals on how greater financial resources could be allocated to these four vital sectors," Eissa said. 

Eissa said the committee report also recommends that the government stop foreign borrowing.

"This kind of borrowing was a necessity in the last four years, but we recommend that the more the country moves towards self-financed resources, the more we abandon foreign borrowing," Eissa said.

He also said that the report urges the government to double the country's foreign exchange resources from the two sectors of tourism and exports.

"We hope that the more these two sectors generate foreign exchange, the more we lessen resorting to foreign loans or issuing debt tools such as treasury bills and bonds on international markets," he said.

He revealed that the committee report recommends turning a number of government loss-making authorities such as Egypt’s Railway Authority into holding companies.

"We believe that it is a necessary step towards relieving these authorities of their huge financial losses and turning them into profitable entities," Eissa said.

Article 124 of Egypt's constitution gives parliament complete powers to amend any of the budget's items.

In the case of amending expenditure items, this should be done in coordination with the government.

MPs, particularly spokesperson of parliamentary coalitions and political parties, will be given the floor to give comments and remarks on the budget and plan which will be put up for a vote at the end of the debate.

In his statement before parliament on 15 April, Minister of Finance El-Garhy said that Egypt's 2018/19 budget targets a GDP growth of 5.8 percent, up from 5.2 percent in the current fiscal year, a budget deficit of 8.4 percent of GDP, 88 percent public debt, and a 2 percent primary budget surplus.

El-Garhy said the new budget targets expenditure of EGP 1.41 trillion, up from EGP 70 billion in the current budget, and state revenues of EGP 989 billion.

"While the new budget will see a 15.5 percent increase in expenditure, it also seeks to increase revenues by 21.6 percent," said El-Garhy, adding that "this will come through boosting tax and fiscal revenues, focusing on administrative and institutional reform, and switching to cash instead of in-kind subsidies."

He also stressed that the government aims to cut the budget deficit to 8.4 percent and public debts to 88 percent of GDP.

Minister of Planning El-Saeed said the objective of the first part of the country's five-year socio-economic development plan (2017-2022) aims to achieve an annual economic growth rate of 5.8 percent.

"We hope that this rate will be achieved in 2018/19 and then reach as high as 8 percent per annum in 2022," El-Saeed said, showing that "the first year of the socio-economic development plan targets EGP 942.2 billion in investments.

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