Egypt: Final legislative push

Gamal Essam El-Din , Saturday 22 Jun 2019

Before adjourning for their summer recess at the end of this month MPs will meet to discuss the budget and a raft of new laws

Egyptian Parliament

Parliament is scheduled to convene on Saturday to discuss the government’s budget and development plan for fiscal year 2019-20. Discussions are slated for Saturday, Sunday and Monday, before MPs adjourn for the summer recess at the end of June.

Hussein Eissa, head of parliament’s Budget and Planning Committee, told reporters the new budget includes a LE36.112 billion (40 per cent) reduction in fuel subsidies.
“Fuel subsidies are due to be cut from LE89.075 billion in 2018-19 to LE52.963 billion in 2019-20,” said Eissa.

“In discussing the measure the committee acknowledged it is a core component of the four-year economic reform programme agreed with the IMF to reduce the budget deficit.”

Many MPs expect fuel prices to increase in July.

“It is up to the government to choose when the increases come into effect,” says Salah Hasaballah, parliamentary spokesperson and head of the Horreya Party.

“MPs have been clear in urging the government to take all measures necessary to mitigate the impact of the expected increase in the prices of local products on limited-income citizens.”

Electricity subsidies will also be cut from LE16 billion to LE4 billion in the new budget.

Minister of Electricity and Renewable Energy Mohamed Shaker told parliament in May that the reduction, part of a five-year programme to end all electricity subsidies by 2022, will go into effect in July, meaning July electricity bills will increase.

The leftist parliamentary bloc, the 25-30 group, opposed any increase in fuel and electricity prices.

“The subsidy reductions threaten to unleash an inflationary spiral affecting basic goods and possibly leading to social unrest,” MP Haitham Al-Hariri told Al-Ahram Weekly.

“And while subsidies are slashed, the budget fails to adequately finance the ministries of health and education. The ministers in charge of the two portfolios have themselves complained of funding shortfalls in the new fiscal year.”

The 25-30 group also complains that while vital services are denied adequate funds, parliament’s budget will increase by LE151 million to reach LE1.551 billion in 2019-20.

In addition to the budget, MPs will discuss a number of controversial laws before parliament wraps up its current session.

Kamal Amer, head of the Defence and National Security Committee, told reporters that the committee has finished its review of amendments to laws regulating the residence of foreigners in Egypt (Law 89/1960) and Egyptian nationality (Law 26/1975).

“New incentives in the residence and nationality laws will encourage foreign investors to come to Egypt and invest,” said Amer. Under the changes, Egyptian nationality “can be granted for the first time against payment of a specified sum.

“The prime minister will be authorised to decide whether a foreigner who buys state-owned or private property, sets up an investment project in line with the investment law or deposits a fixed sum in foreign currency in a local bank is eligible for Egyptian nationality.”

According to Amer, a unit affiliated with the cabinet will review nationality requests and pass recommendations to the prime minister.

“The unit will include representatives from the ministries of foreign affairs, interior, investment, international cooperation, and concerned security apparatuses. Nationality requests will be submitted to the unit against a payment of $10,000 or its equal in Egyptian pounds, which will be funded should the application be rejected. The unit will be obliged to review any request within three months of the date of submission and if the request is approved an initial six-month temporary residence will be granted.”

Economic Affairs Committee head Ahmed Samir told reporters changes to the nationality and residence laws are in line with the new investment law.

“The aim is to boost foreign investment by easing access for foreigners to residence and nationality. The changes will apply to those who have long-term investments and need residence or Egyptian nationality to promote their activities.”

Samir revealed the committee had voted in favour of amending the investment law (72/2017).

“The amended law will be put up for discussion in parliament next week. The changes, to articles 11, 12 and 13, provide incentives to existing investment projects seeking to expand.”

Minister of Investment Sahar Nasr told MPs that “the investment law needs to be overhauled periodically to keep up with changing international and local conditions.”

“We need to incentivise existing projects to expand and open new production lines creating new employment opportunities,” said Nasr. “Articles 11, 12 and 13 have been amended with a view to encouraging new projects, particularly in provincial governorates. The incentives offered include exemption from most registration fees which currently constitute a big burden.”

Alaa Wali, head of the Housing Committee, told reporters on 15 June that the committee has finished its report on government-drafted changes to the law (136/1981) covering old rents of non-residential units.

“The law was redrafted in line with the ruling issued by the Supreme Constitutional Court in May 2018. The court judged that the first paragraph of Article 18 be invalidated because it allows old contracts to continue indefinitely,” said Wali.

“The amended law states that the life of a rent contract will henceforth be five years, and that rents can be increased by 15 per cent annually.”

The ruling, said Wali, left parliament no choice but to amend the law before it adjourns for summer.

 *A version of this article appears in print in the 20 June, 2019 edition of Al-Ahram Weekly under the headline: Final legislative push

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