The large deficit, which is nearing close to 500 billion Egyptian pounds (nearly $27.7 billion), is not the main focus of the new 2017-2018 Egyptian budget, which is said to begin this July. The focus is not how to combat the impending trillion-dollar budget that will be needed for the first time in the country’s history, nor the fact that the dollar is now 18 Egyptian pounds or that the barrel of gas has now reached the price of $57 to the gallon, an 8.4 per cent inflation rate.
There are more serious questions at hand, notably the internal and external borrowing that is taking place in order to fill the budget deficit, which is imposing more burdens on the citizens and employees of the state. There has also been a significant decrease in the support for goods and services, such as water provision, electricity, housing and transportation, as well an increase in taxes in order to support state prison facilities and generate more rewards for the judiciary and the police.
Despite the fact that the new budget imposes a number of financial burdens on citizens, decreasing their living standards by increasing the price of goods, the government is experiencing a chronic deficit despite its attempt to launch a programme for economic reform. The first objective of this programme is to reduce the deficit and reduce borrowing.
According the deputy to the Minister of Finance, Ahmed Kojak, the Egyptian state will borrow close to $9 billion in the new fiscal year in the from of financial bonds and direct loans.
In addition, the new budget gives no interest to the domains of production, especially manufacturing, exports and tourism. The government has showed no interest in reopening factories that have been shut down for years nor has it expressed interest in helping factory owners overcome the current financial challenges that forced them to close their doors. The government is not willing to allocate billions of dollars to starting new factories, which is the very project that Al-Sisi promised to oversee throughout his presidential campaign.
What we do see in the new budget is an increase on the burdens that will be placed on people’s shoulders as well as an increase in taxes that will be used to pay back the $500 billion deficit, a $67 billion increase since last year. Not to mention that there is a projected 14 per cent increase in taxes, which will be imposed on the price of goods.
The budget in the new fiscal year shows an increase in spending in the domains of security and state prison. The state has plans to build a new 200 acre prison in the south of the country that is estimated to cost nearly 5.1 billion Egyptian pounds ($0.28 billion). The state has built 11 prisons in the last two years. A total of five prisons were built in 2015 alone, costing an estimated two billion Egyptian pounds ($0.11 billion).
The main features the budget will introduced next July are a 40 per cent increase in taxes and fuel prices. It is the citizen who will carry the bill as usual. Simply put, the new Egyptian budget does not recognise the rights of the poor but rather, tramples on them. The state has declined to respond the most outstanding question of the moment: What happened to Gulf aid? Some sources have estimated that the Gulf has supplied the Egyptian government with nearly $30 billion, while other sources estimate that it is closer to $60 billion. What has happened to the fate of this country and its inability to save in the last two years alone? What about the decline of oil and food prices and what about the 5.32 billion pounds that have disappeared from the budget throughout the course of 2015?
Translated from The New Khalij, 28 March 2017
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