Minister of Finance Mohamed Maait announced that the FY 2020/21 draft budget includes a package of procedures that aims to secure Egypt’s fiscal and economic status and to implement its fiscal policy that focuses on reducing the public debt to GDP ratio to 82.8 percent, keeping an initial public budget surplus of two percent from GDP, and decreasing the total deficit to GDP ratio to 6.3 percent.
According to its preliminary statement issued on Monday, the FY 2020/21 draft budget lowers Egypt’s economic growth rate to 4.5 percent, down from 6.4 percent, on the back of the COVID-19 outbreak.
The budget’s preliminary statement is a document the finance ministry has started to issue since FY 2016/17 to illustrate the coming budget allocations, revenues and disbursements.
The FY 2020/21 draft budget was released under the theme “A Supportive Budget for Egypt’s economic activity, human development back, and Structural reform.”
Maait noted that the preliminary statement adopts a conservative approach regarding Egypt’s economic performance, adding that overcoming COVID-19 pandemic on a global scale and international developments are expected to play a role in returning to the previous expectations of the Egyptian economic performance.
He added that the ministry is tracking the new updates regarding global oil prices, which are expected to raise oil prices globally on the back of the oil production reduction agreement.
He also stated that the preliminary statement shows the state’s up-to-date fiscal policies' orientation for the coming fiscal year, spending priorities, and the reform procedures necessary to be adopted.
The minister said that the new draft budget ensures social protection net enhancement, equitable distribution of state resources, focusing on boosting the efficiency of food commodity programmes and expanding cash subsidies for certain groups.
According to the FY2020/21 draft budget, the government has appropriated unprecedented allocations for the healthcare sector, amounting to EGP 254.5 billion, recording an increase of EGP 78.9 billion.
As per the orders of President Abdel-Fattah El-Sisi, the draft budget includes a 75 percent increase in the bonuses of medical professionals, with an extra annual cost of EGP 2.25 billion, costing the budget EGP 5.25 billion annually.
The draft budget also raises the education sector's allocations to EGP 363.6 billion, increasing by EGP 46.9 billion, and the scientific research to EGP 60.4 billion, with an increase of EGP 7.5 billion.
The new draft budget increases subsidies for the Takafol and Karama (Solidarity and Dignity) social protection programmes by 2.7 percent, to reach EGP 19 billion, in addition to EGP 84.5 billion allocated to subsidised goods and bread.
The draft also includes giving state employees working under the civil service law a bonus of seven percent of their basic salaries, with a minimum of EGP 75 monthly, and giving other employees a bonus of 12 percent of their basic wages with the same minimum.
It also includes a 14 percent raise in pensions as of 1 July with an annual cost of EGP 31 billion to improve pensioners’ livelihoods, in addition to supporting social housing with EGP 5.7 billion and backing the real-estate initiative for medium-income classes with EGP 50 billion to be provided by the banking system with an interest rate of 10 percent over 20 years in installments.
Deputy minister for fiscal policies and corporate development Ahmed Kojok said that the FY 2020/21 draft budget estimations are based on the previous forecasts set before the COVID-19 outbreak and its consequences on economic growth rates.
He added that revenues are expected to increase at a growth rate that exceeds the increase in spending, which provides an ample room for reducing public deficit and debt rates. He stated that the total public spending is expected to record EGP 1713.2 billion, while revenues are projected to reach EGP 1288.8 billion, increasing by 13.6 per cent compared to FY2019/20.
Kojok said Egypt’s economic policy includes maximising state asset revenues through a sound pricing system and expanding in partnership between the public and private sectors, in addition to fixing fiscal structures to boost the efficiency of economic authorities and the public enterprise sector.