Egypt: Budgetary equations on hold amid coronavirus outbreak

Gamal Essam El-Din , Thursday 16 Apr 2020

The coronavirus crisis has led parliament to postpone discussion of the country’s new budget

Budgetary equations on hold
Budgetary equations on hold

Head of parliament’s Budgetary and Planning Committee Hussein Eissa said on Saturday that Egypt’s new budget for the fiscal year 2020-21 had been referred to parliament for debate on 30 March.

“But the committee members will not be able to discuss the new budget immediately for two reasons,” Eissa said. In line with Ministry of Health precautionary measures to limit the spread of the Covid-19 coronavirus, MPs will not be able to gather in one place to discuss the budget. Moreover, “we are not in a hurry as the constitution gives us 90 days [three months beginning on 1 April and ending on 30 June] to discuss the budget,” he said.

Eissa indicated that due to coronavirus fears, the ministers of finance and planning would not be required to come to parliament in person to deliver statements on the budget and the five-year plan this year.

“It is enough for them to send their statements so that the committee can discuss them at the most appropriate time,” Eissa said, adding that MPs could examine the budget and new development plan at home and then send in their comments by email for discussion when work resumes.

Parliament Speaker Ali Abdel-Aal, indicated in a statement on Sunday that the House of Representatives will meet on 29 April as scheduled. “We have a busy legislative agenda that should be discussed soon and can’t be postponed any longer,” said Abdel-Aal, adding that the House will discuss proposed real estate tax exemptions and state employees’ bonuses, both aiming to mitigate the economic impact of the coronavirus on low and limited-income classes and support businesses hit by the pandemic.”

Abdel-Aal indicated that when MPs meet on 29 April, they will not sit close to each other, and they will be required to wear face masks and follow strict sanitisation and disinfection measures.

Secretary-General Mahmoud Fawzi also indicated on Monday that parliamentary committees with a large number of members, such as the Budget and Planning Committee, will be allowed to use the Shura Council hall to hold their meetings. This means that the budget committee led by Eissa might opt to meet in the Shura Council hall to discuss the budget on 29 April.

Eissa said that the new budget increased allocations to the healthcare sector. “For several years, we have asked different governments to raise allocations to the healthcare and education sectors, but to no avail,” he said, indicating that “the economic reform programme between 2016 and 2019 came at the expense of vital sectors such as health, whose budget has not quite been enough over the last few years.”

The coronavirus crisis had led the government to earmark greater allocations to the two sectors of healthcare and education. Minister of Finance Mohamed Maait said on Tuesday that the healthcare allocations in the new budget will increase by LE78.9 billion, or from LE166.6 billion in the 2019/2020 financial year to LE245.5 billion in the 2020/21 financial year. The budget of the education sector will increase by LE46.6 billion to reach a total of LE336.6 billion, and that for scientific research will reach a total of LE60.4 billion, an increase of LE7.8 billion.

He indicated that the LE100 billion that President Abdel-Fattah Al-Sisi had ordered on 14 March be allocated to help fight the coronavirus and its economic costs would be part of the present and the new budget.

The new budget aimed at improving the living conditions of the Egyptian people, he said. “To achieve this objective, the budget allocates LE326.3 billon to subsidies, or 5.3 per cent of GDP,” Eissa said, indicating that LE19 billion would go to pension payments, LE5.7 billion to social housing, LE170 billion to pension funds, LE7 billion to boosting exports, and LE280.7 billion to government investments.

Following the approval of the new budget in a cabinet meeting on 26 March, Minister of Finance Mohamed Maait said the 2020-21 budget reflected the directions of the political leadership to raise the standard of living of Egyptians through initiatives that should contribute to improving the quality of public services and strengthening the pillars of social protection to ensure that all groups in society benefit from development returns.

Eissa said the social aspects were quite clear in the new budget. “Allocations to salaries will be increased by LE34 billion [11.3 per cent] to reach LE335 billion in total, and this is another expression of President Al-Sisi’s instruction that employees’ salaries and wages be increased this year in a bid to mitigate the negative impact of the coronavirus,” he said.

“The new budget also takes into account President Al-Sisi’s orders that the bonuses granted to the medical professions be increased by 75 per cent in appreciation of their role in fighting the coronavirus,” he added. “A total of LE2.25 billion will be disbursed to medical teams who stand on the front lines of fighting the coronavirus.”

The 2020-21 budget includes expenditures of LE1.7 trillion and revenues of LE1.3 trillion. “Despite the harmful economic costs of the coronavirus, the budget aims to reduce the budget deficit to 6.3 per cent of GDP and even achieve a primary surplus of two per cent,” Eissa said.

“It also increases government investments to LE280.7 billion, or 64.3 per cent over the current fiscal year, thus contributing to economic activity and continuing to improve infrastructure and create an investment-friendly environment.”

Maait said it had been the bold economic reform programme that had been implemented between 2016 and 2019 that had helped Egypt fight the coronavirus. “Due to this unexpected crisis, the budget forecasts that GDP growth will not exceed three per cent, or down from an earlier expectation of six per cent,” Maait said.

“But growth of three per cent will still be one of the highest rates in the Middle East.”

*A version of this article appears in print in the  16 April, 2020 edition of Al-Ahram Weekly under headline: Budgetary equations on hold


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