Social Democratic Party rejects state budget balance sheet, cites 'excessive foreign borrowing'

Gamal Essam El-Din , Wednesday 20 Apr 2022

MP Farid El-Biaddi, a member of the leftist-oriented Egyptian Social Democratic Party, announced in a statement on Wednesday that his party's deputies have voted against the balance sheet of the state's 2020/21 budget.

Egyptian parliament
File photo of the Egyptian parliament (Ahram)

"The balance sheet of this budget, which was approved by the House of Representatives on Tuesday, was rejected and voted down by our party's MPs," said El-Biaddi.

El-Biaddi said the balance sheet of the 2020/21 budget showed that the government has been heavily involved in "foreign borrowing."

"What is much worse is that reports issued by watchdog institutions show that large amounts of foreign loans were not efficiently used or were a matter of corruption practices," said El-Biaddi.

Figures released by the Central Bank of Egypt (CBE) on Monday show that Egypt's foreign debt rose to $145.5 billion at the end of the second quarter of the current fiscal year, from $137.4 billion at the end of the same period of FY 2020/19.

The CBE's figures show that most of Egypt's foreign debt – or $132.7 billion out of a total $145.5 billion – is long-term, compared to $125.9 billion during the same period of FY 2020/19.

As for Egypt's short-term loans, CBE figures show that they reached $12.8 billion at the end of the second quarter of FY 2021/20, compared to $11.480 billion during the same period of FY 2020/19.

Finance Minister Moahmed Maait told MPs on Tuesday that the government of Prime Minister Mostafa Madbouly has formed a committee to study the issue of foreign borrowing and restrict it to very narrow limits.

"The committee will be headed by Minister of Planning and Economic Development Hala El-Said and will make sure that foreign borrowing is directed to only spending on strategic national projects," said Maait.

El-Biaddi also indicated that “the government's report on the 2020/21 budget contained a lot of incorrect figures and statistics.”

"For example, the report claimed that total spending on social protection programmes and subsidies had increased by more EGP 1.8 billion than was originally allocated by the budget to reach a total of EGP 338.9 billion," said El-Biaddi, adding that "it is good that the government earmarks greater allocations for social programmes and subsidies, but reports submitted by watchdog institutions like the Central Auditing Agency agree that actual spending on social programmes and subsidies under 2020/21's budget had already decreased by 20 percent to reach just EGP 263.9 billion."  

El-Biaddi also said that "many other figures cited by the report on spending on sectors of education and health in the 2020/21 budget contradict figures cited by supervisory and watchdog institutions."

El-Biaddi explained that the report on the 2020/21 budget show that the government's decision to devalue the Egyptian pound to reach an economic reform programme with the IMF has negatively impacted the lives of millions of poor, low and average-income citizens.

"The government promised poor citizens that it would compensate them, but nothing happened and what is much worse is that it again resorted to devaluing the pound last month to borrow again from the IMF and that this would be again at the expense of poor and limited-income citizens," said El-Biaddi.

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