Egypt parliament calls for restricting foreign borrowing to very narrow limits

Gamal Essam El-Din , Sunday 11 Jun 2023

The government should do its best to restrict foreign borrowing to very narrow limits, particularly as high-interest rates are now exerting tremendous pressure on the public finances of world economies, including Egypt, said Chairman of Egypt Parliament's Budget Committee Fakhri El-Fiqi.

Chairman of Egypt Parliament s Budget Committee Fakhri El-Fiqi. Photo:Ahram

El-Fiqi's remarks came during a parliamentary session on Sunday in which he read out the committee's report on Egypt's Budget and Development Plan for the coming fiscal year of 2023-2024.

He also urged the government to show more fiscal restraint.

"The government should exercise greater control on projects which are funded by foreign loans to make sure they are achieving their objectives," said El-Fiqi, indicating that "budgetary allocations to serve the public debt's interest rate in the new FY 2023-24 will reach EGP 1.120 trillion, which represents 73 percent of total expenditures."

He recommended that the government prioritize finishing existing investment projects that still need to be completed.

"Please finish the existing projects first. Before you initiate new ones, you should ensure that they are economically and socially feasible," said El-Fiqi.

He also called on the government to do more to mitigate the impact of soaring inflation on vulnerable classes.

"Watchdog authorities like the Egyptian Competition Authority and the Consumer Protection Agency should exert more supervision over retail markets to control prices and curb inflation," said El-Fiqi.

He added that strong measures are also needed to redress the trade imbalance. These measures include reducing imports, boosting industrial and agricultural exports, and stimulating foreign and Arab direct investments."

On a different note, El-Fiqi praised the government for increasing salary allocations by 17.5 percent to reach EGP 470 billion.

"We also see that allocations for food subsidies will rise by 20 percent and fuel subsidies by 24 percent," he said, adding that EGP 31 billion will also go to the Takaful and Karama (Solidarity and Dignity) programmes."

The new budget will raise social spending to EGP 529.7 billion, including EGP 127 billion on ration cards, EGP 119.4 on fuel subsidies, EGP 6 billion on social insurance, and EGP 10.2 billion on low-cost housing.

"Though the preparation of the new FY 2023-2024 budget came amid very exceptional circumstances resulting from the negative spillover effects of the Covid-19 pandemic and the subsequent Russia-Ukraine war, which triggered an unprecedented wave of inflation and high-interest rates, the government was able to absorb the shock of these crises and soften their impact on vulnerable classes," El-Fiqi said.

He also indicated that the budget raises social spending to EGP 529 billion and that the value of government investments will increase by 55.9 percent to reach EGP 586.7 billion.

These amounts will be used to set up projects that can generate job opportunities and improve public services, according to El-Fiqi.

He noted that overall the new FY 2023-2024 budget shows a 41.2 percent increase in revenues, reaching EGP 2.1 trillion.

It also shows a 44.4 percent increase in spending compared to the current budget, reaching EGP 4.3 trillion.

"The expected increase in revenues is attributed to the growth in tax revenues, which will reach EGP 2.1 trillion, up from EGP 1.5 trillion in the current FY 2022-2023," said El-Fiqi.