After approving a series of new taxes, Egypt and the budget deficiency
Egypt, Economics, 5/20/2004

Legislations approved by the Egyptian parliament on Tuesday, including imposition on new fees and increase of taxes on cars, restaurants, traveling abroad and mobile service, showed that Egypt has been living since years at a level beyond its capabilities with the increasing general budget deficit, financed by internal debt. A continuous problems for the government, experts views are different over solving.

It is, however, scheduled that these fees and taxes will be valid as from July according to the Egyptian prime minister Atif Obeid.

The speedy increase in the budget deficiency which is increasing at a rate higher than the GNP leads to increasing internal debts. This debt reached 370 billion Egyptian pounds ( USD 59.6 billion) in 2003- 2004 including 266 billion Egyptian pounds due to be paid by the government directly and the remaining part by public establishments. Egypt's foreign debts reached USD 28.7 billion by the end of June 2003, according to finance minister Midhat Hassanin. The budget deficit will reach 52 billion Egyptian pound ( USD 8.4 billion ) for the fiscal year, 2004- 2005.

According to experts, the state's revenues ( taxes, customs, fees and public companies profits) continue to be less than current spendings ( wages, supporting basic commodities and others). A matter which increases the government's debts. The difference between revenues and spending reached 20 billion Egyptian pounds in 2003- 2004 according to the economy professor at al-Azhar university Muhammad Abdul Halim.

Because of this difference, the state is obliged to borrow in order to cover basic needs. This situation makes the expert in the national planning institute Ibrahim al-Esawi to say that " Egypt is living beyond its capability." He said that the state no longer contributes to national saving, rather contributes to negative saving by borrowing from saving of individuals and companies for its needs at the expense of investment.

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