(Photo Presidency Handout)
President Abdel Fattah Al-Sisi intends to return the draft general budget for fiscal year (FY) 2015/2016 for the government’s reconsideration to reduce the budget deficit from EGP 281bn, according to former minister of economy Sultan Abu Ali’s expectations.
The new fiscal year begins on Wednesday, which looks set to commence without the state’s budget having been approved.
According to Abu Ali, the delay in the budget’s approval by the Egyptian administration until now reflects governmental disturbance and lack of agreement over the expenses and revenues items, which will worsen the budget deficit.
“The government is obliged to adhere to the old budget, for FY 2014/2015, until the approval of the new budget by the President, who has the legislative power under the absence of the Parliament,” says Abu Ali, adding that the government should look for more procedures to reduce the deficit.
As per Ministry of Finance data on the draft budget proposed to President Al-Sisi, the new budget deficit will reach EGP 281bn, which is 9.9% of the gross domestic product (GDP).
“The delay in the budget is against the constitution, which states that the budget be announced three months before the end of the fiscal year. This means that it should have been announced in March at the latest,” says Samer Atallah, Economics Professor at the American University in Cairo (AUC).
Atallah stressed the importance of presenting the budget’s final form for social dialogue under the president’s instructions, due to its importance in the lives of the citizens and the social level. This would be to affirm the obstacles the government is facing economically, which come in the way of lowering the deficit.
Ayman Al-Kaffas, official spokesman of the Ministry of Finance, refused to comment on the possibility for the government to work using this FY’s budget until the new budget is approved. He also refused to speak about the president’s time of approval.
“The new budget includes EGP 249bn debt interest, workers’ wages at EGP 228bn, and subsidies, social benefits and grants with total amount of EGP 709bn. All of this presents 110% of the state’s revenues, which reached EGP 599bn, in addition to spending on health, education and housing,” added Rashad Abdo, an economist and professor of economics at Cairo University.
Abdo expects the government would face difficulties over the new FY 2015/2016, and it will be under the pressure of debts in order to overcome the budget deficit. He requested that the president re-send the budget to the government to review it.
Abdo expects that allocations for debt interests will jump to EGP 249bn, with an increase of EGP 50bn, exceeding for the first time the size of allocations for subsidies, social benefits and grants, expected to range between EGP 230bn and EGP 232bn.
