Egypt s Minister of Finance Mohamed Maait speaks before the parliament. File photo/Khaled Mashaal
"We prepared this budget in a very careful way as the war in Ukraine led to a lot of apprehension in international economic and financial circles over how it would impact countries like us," said Maait, adding that "we were under huge foreign pressure when we were drafting this budget.”
Maait elaborated on these pressures, saying "just have look and see that the costs of importing oil and wheat have skyrocketed, and so there is high foreign inflation and we are importing it," Maait explained further.
He explained further, saying "we are importing 120 million barrels of oil a year, with a price of $60 per barrel and a total cost of $7.2 billion, and suddenly we were forced to buy a barrel of oil with a price of $125 a barrel and a total cost of $14.5 billion a year."
As for wheat, said Maait, "we were importing 12 million tons a year, six million of which for the government and another six million for the private sector, with a price of $200 per ton, and now the price skyrocketed to $500 per ton."
"And while we were borrowing with an interest rate of 5 percent, now we are borrowing at interest rate between 12 percent and 13 percent," said Maait, adding that "the government alone will not be able to stand up to the crisis and that there should cooperation between the government on one side and the House of Representatives, the people and society on the other hand."
Maait's statement in parliament on Sunday came in response to opposition MPs who sharply criticised the budget, citing excessive foreign borrowing and lack of fiscal discipline.
Fakhri El-Fiqi, chairperson of the House's Budget Committee, reviewed a 360-page report prepared by the committee on the state's FY 2022/23 Budget and Socio-Economic Development Plan, saying "the drafting of the FY 2022/23 budget came in the course of very complicated international conditions triggered first by the coronavirus pandemic and second by the Russia-Ukraine war."
As a result, El-Fiki added, "the government was forced to draft the current budget, taking into account the impact of the adverse global financial and economic conditions on vulnerable classes.”
Two political parties – the liberal Reform and Development and the leftist Egyptian Social Democratic Party – rejected the budget, citing excessive foreign borrowing and lack of fiscal discipline and austerity measures.
A number of independent MPs with leftist leanings also joined the chorus of MPs rejecting the budget. Mostafa Bakri and Diaaeddin Dawoud said their rejection is largely due to privatisation policies and selling of public industrial assets.
Diaaeddin Dawoud, a Nasserist MP, drew a comparison between the FY 2010/2011 budget and that of FY 2022/23. "In the FY 2010/11 budget, the cost of interest rate on loans reached EGP 85.1 billion, representing 21.2 percent of expenditure, while in FY 2022/23 the cost of interest rate on loans skyrocketed to EGP 960.1 billion, representing 33.3 percent of expenditure," said Dawoud, adding that "this means that this budget was drafted to serve creditors and not ordinary Egyptian citizens."
In response, Maait said "drawing a comparison between the two budgets of 2010/11 and 2022/23 is not fair."
"In 2010/11, Egypt's population stood at 80 million, but now we are more than 100 million, and in 2010 we were suffering from power shortages everywhere, but now there is electricity everywhere, and in 2010 there was almost no natural gas, but now households in most of Egypt are connected to natural gas," Maait explained.
MP Fathi Qandil also sharply criticised the government's economic planning policies, saying "in Egypt there is haphazard planning."
This triggered a response from Minister of Planning Hala El-Said who emphasised that "planning of economic policies, investments and projects in Egypt is based on scientific criterion." El-Said asked for the word "haphazard" to be removed from the session's minutes.