Mubarak approves broad lines of New State Budget
Egypt, Economics, 1/15/2001

Egypt's President Hosni Mubarak approved, in principal the broad lines of new state budget that hits LE 123 billion against LE 112.6 billion in current budget.

President Hosni Mubarak Sunday received Prime Minister Atef Ebeid.

Finance Minister Medhat Hassanein stated after the meeting that discussion dealt with the main features of the general state budget in the fiscal year 2001/2002.

"We submitted to the President the main features of the budget and the ministries will be committed, when drawing up the general budget in the coming year, to the bases of total annual allocation. The Ministries will also abile by the rules that control the expenses and lead to an increase in the quality of services rendered to citizens" He said.

Ministries should provide more job opportunities and should buy goods and products of local production in order to encourage local production and do away with idle capacities.

The Minister of Finance added: within this context, the figures expected in the budget of 2001/2002 is about 123 billion pounds compared to the last fiscal year which ends on 30/6/2000 in which the budget amounted to 112.6 billion pounds, i.e. an increase of 10.4 billion pounds.

The Minister said that the general state budget in, the coming fiscal year would be presented to the Shura Council in April and to the People's Assembly at the end of the same month (April).

Medhat Hassanein said that allocations for education services in the general budget amount to 20.6 billion pounds compared to 18.6 billion pounds in the current budget.

As regards health services and their improvement, allocations amount to 8.2 billion pounds compared to 6.2 billion pounds in the current budget.

He said that the annual subsidy will rise from 5.8 to 6.2 billion pounds, pointing out that providing the necessary allocations in support of social and health insurance and providing pensions to some limited-income brakets will cost 14 billion pounds.

Allocations for youth services amount to 5 billion pounds.

This means that total allocations covering the social dimension in the coming budget will amount to 54 billion pounds, representing 44 per cent of the total general state budget.

The Minister of Finance said that as regards wages and salaries for state employees, they would amount in the new budget to about 32.2 billion pounds compared to 28.8 billion pounds in the current budget, an increase of about 10-11 per cent.

He said that the general state budget aimed at providing job opportunities for about 150,000 new graduates in government sectors within the framework of the state plan for economic and social development.

The budget also includes remunerations and incentives for employees and completing an overall plan for administrative reform and improving conditions of employees.

The Minister said that the general state budget is considered an instrument to realize these goals.

As regards new investments in the plan, which is the third item, the Minister of Finance said that it aims at providing investment finance for the infrastructure (sanitary drainage, roads, building schools, hospitals and health units) which amounts to about 15 billion-pounds.

As regards servicing the general debt, the Minister of Finance said that the general debt caused no concern because financing it comes basically from pensions and pension funds that grow at an average of 11 per cent annually.

It is also financed from the savings of banks through issuing bonds and treasury bonds, savings and investment certificates.

The complementary relation between financing and spending provides for society annual development rates ranging between 5 and 6 per cent.

These rates should continue in order to become three times the rate of population growth.

As long as we are able to service the general debt from interests and installments financed from real sovereignty resources or current resources, we continually take into consideration the financial balance at state level when drawing up the general budget.

As regards tax reform, the Minister of Finance said that it revolves on four dimensions:

First: Reconsidering taxation brackets so that there may be justice among taxpayers.

Second: Improving the taxation administration to deal with old files and collect state dues.

Third: Developing the Taxation Administration, by providing training, culture and proper places to the employees at which they can perform their duties in the best manner.

Fourth: To combat tax evasion by reconsidering punishments imposed on those who evade paying taxes or customs.

Medhat Hassanein explained that these four dimensions lead to increasing sums collected from taxes.

He expected-in the general budget, in case of approving the taxation law was approved in the current parliamentary term, that these reforms will have an effect on the sums collected as taxes in the coming year.

He said that President Mubarak approved, in principle, these main features of the general state budget.

He stressed that the general debt, its elements and its ratio to the Gross Domestic Product (GDP) remain within safety limits that are, approximately, about 52 percent of GDP.

The Minister said that if we compare this ratio with other countries, we see that it is lower because the ratio in other countries ranges between 60 and 80 per cent sometimes.

So far, we depend in financing our current expenses (wages, salaries, servicing debt and various expenses) on real resources that come from current and sovereignty resources and do not depend, at all, on debt.

The Minister said that borrowing to finance the infrastructure and set up buildings for education and hospitals and clean water, is considered, from the financial and economic point of view, a balance in general finances and a balance between expenditure and the sources of Financing.

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