A budget for Egypt that doesn’t kill

Wael Gamal , Monday 27 May 2013

The fundamental interests that controlled the economy during the Mubarak era have not changed. They prevented Mubarak from making much-needed health sector reforms and today they stop Morsi from taking these measures

Economic austerity kills and makes people sick, according to David Stuckler, a leading sociology researcher at Oxford University, and Sanjay Basu, assistant professor of medicine at Stanford Prevention Research Centre.

In an article titled 'How Austerity Kills' published in The New York Times on 12 May, they tell us: “As scholars of public health and political economy, we have watched aghast as politicians endlessly debate debts and deficits with little regard for the human costs of their decisions.

"Over the past decade, we mined huge data sets from across the globe to understand how economic shocks — from the Great Depression to the end of the Soviet Union to the Asian financial crisis to the Great Recession [of 2008 onwards] — affect our health. What we’ve found is that people do not inevitably get sick or die because the economy has faltered. Fiscal policy, it turns out, can be a matter of life or death.”

In Greece, at the heart of the world economic crisis, the national health budget was cut by 40 percent over a six-year period to reduce the government’s budget deficit, and meet the conditions of the Troika: the IMF, EU and Central Bank of Europe. Some 35,000 doctors and nurses have lost their jobs, hospital admissions have soared and drug supplies have dwindled. New HIV infections have more than doubled, infant mortality has risen by 40 percent, and malaria is on the rise for the first time since it was eradicated at the end of 1970s in southern Greece (the original article in English says it was eradicated in the early '70s).

The two researchers state in their recent report/book 'The Body Economic: Why Austerity Kills', that Iceland, which experienced an economic collapse in 2008, was able to avoid these disasters by putting austerity to the vote, and avoided cutting health spending so no one lost their right to healthcare and medicine, and the economy recovered.

Austerity and the health of Egyptians

The platform of presidential candidate Mohamed Morsi stated: “The Egyptian citizen who pays for 75 percent of healthcare costs out of his pocket and spends 11 per cent of his income on healthcare, who suffers the highest rates of disease and injury in the world, has the right to be provided with preventive care, treatment and emergency health services without further cumbersome financial burdens, and without compromising his dignity.”

The economic development plan for 2013-2014 submitted by Qandil’s government states: “One of the greatest challenges facing the [health] sector is modest public spending, 4 to 5 percent of overall spending. This is not enough to cover the health needs of low income sectors, address the population problem and costly chronic diseases.”

The elected president’s platform promised to raise the healthcare budget to 12 percent of public spending by the end of his presidency. So, what happened?

Over the first two years of President Morsi’s tenure, healthcare spending remains at 4.9 percent, which the government – which wrote the budget – finds modest and insufficient. This makes it doubtful the figure will rise to 12 percent in the remaining two years of his tenure (the 2013-2014 budget currently under discussion ends in June 2014).

To put this into perspective, we should make some comparisons. In Greece, after the economic crisis and gruelling austerity measures, healthcare spending is 10.8 percent of GDP (not only public spending) and each citizen’s share is $1,160 (WHO 2011 statistics).

In Tunisia, it is 6.2 percent of GDP and the share of each citizen is $584. In the US, where researchers say the crisis and austerity kill people, healthcare spending is 17.9 percent of GDP, or $8,608 per person annually.

In Egypt, according to the World Health Organisation, the percentage of public spending remains at 4.9 percent or $310 per person annually, while spending on healthcare comes in third place in the budget of Egyptian families after food and housing at 12 per cent of family spending (2012). Meanwhile, 45 percent of the population does not have health insurance, according to the development plan of the Ministry of Planning.

The platform of the elected president is based on building more healthcare units in towns and villages, renovating government hospitals, providing high quality health care that is sustainable and satisfactory to every citizen without discrimination, as well as focusing on preventive medicine, providing reasonably priced and effective medicine – including all basic medicine. But doesn’t all this need funding?

If the 2013-2014 budget remains the same as under Mubarak, all these plans evaporate. A budget that adopts austerity as a means and method to cut expenses makes matters worse by reducing the value of the pound and cutting subsidies to comply with austerity conditions. This reduces the real income of individuals who already spend 11 percent of it on healthcare, while prices continue to soar.

This is especially hard on the poor who cannot afford treatment to begin with, and so they get sick and die. (Here I refer to articles by physician, writer and friend Mohamed Abul-Gheit, which are both solemn and tender, published in Al-Masry Al-Youm, 'Medical Reasons to Call the Egyptian State Apostate' and 'Memoirs of an Unprofessional Killer')

Stop the killing

The first instinct of those who are wise and sensible is to protect life, and when economic policies lack this human instinct it becomes premeditated murderer. Those who write economic policies tell us there are no resources for the budget and the goal now is to cut the budget deficit.

Around the world, without any revolutions, in 2000 the UN and the Organisation for Economic Cooperation and Development (OECD) began looking into what is called innovative development funding, out of concern about the expected failure of the millennium developmental goals in healthcare, education and poverty. They explored ideas to fund international assistance to countries in need, such as taxing pollution (carbon tax), banks, stock exchange transactions, derivatives trading, currency exchange, air fuel and air tickets. There were also suggestions of exchanging debts for healthcare and education.

All of these initiatives, that in no way challenge the structure of economic control or major interests controlling the world economy, were based on two sources of funding: those benefiting from globalisation, such as the financial sector – which would also curb its spiral that triggered the world crisis – and those responsible for polluting the Earth, such as cement producers and airline companies.

This logic can also be applied in Egypt, to save lives and generations from disease and death if these simple reform measures are implemented. We are not talking about restructuring the budget to apply the philosophy of the Ministry of Planning’s plan: development biased towards the poor, which states, “Focusing on social justice could achieve greater growth than others, through a strategy only focused on the concept of developing GDP to achieve development.” We are not talking about redistributing the people’s plundered wealth or revising the priorities of public spending – such as the proposal by physicians about the current healthcare budget to redress its corrupt bias favouring senior staff at the Ministry of Health.

Egypt ranks 145 in the number of companies that pay their taxes, according to 'Paying Taxes 2013: The Global Picture' issued by PricewaterhouseCoopers, and the International Finance Corporation (IFC). The report states that the average tax on profits is 13.2 percent versus 25.8 percent on work.

What is more important than the health of Egyptians? That was the title of a campaign lobbying to increase public spending on healthcare in Egypt. The response by Egypt’s rulers was: subsidising exports is more important (they remain in place without revision even at LE3.1 billion); reassuring stock market investors, the fat cats of Mubarak’s era, is more important (legitimate and internationally recognised taxes were cancelled on mergers and acquisitions, cash dividends, capital gains, while paltry taxes on trading were kept in place as a smokescreen).

They also responded by increasing the budgets of the Ministry of Interior and the Security and Police Authority by LE710 million, from LE4.1 billion to LE4.9 billion and LE18 billion, respectively.

The fundamental interests controlling the economy prevented the Mubarak regime and Nazif’s government from repaving the 26 July Ring Road, even though it was used by the prime minister and cabinet members every day, because even simple repairs could not be completed efficiently in an economy of cronyism, favouring major companies, monopolies and corruption. These same interests are today blocking reform measures that correlate to the simplest of human instincts: protecting life.

The people demand a change of regime.


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