Egyptian financial reform experiment in focus
Since the early beginning of the year 1998-1999, a host of major challenges emerged posing heavy burdens on Egypt's economy, including an increased deficit in the general budget, a big increase in the volume of public investments besides the ascending rate of the public debt and its service burdens.
Non-growth of the State resources to the extent which allows facing an inevitable increase in public expenditures added to Egypt's burdens.
Based on the above-mentioned premises, the financial policy in the new millennium sought to apply a new package of financial and economic reform programs through 14 programs to be carried out in succession, in the realms of public resources, spending, economic organizations, domestic and public debt management along with developing the National Investment Bank (NIB).
The following is a summary of each program:
ÊÊÊ Public resources programs whose main points aim at:
ÊÊÊ -Drafting the new income tax bill so as to ensure a full application of the unified taxation system.
-Cutting down the taxation burden on all taxpayers through cutting down tax trenches, and raising family exemption ceiling.
-Simplifying tax inspection and applying a risks management system. -Extending facilities to taxpayers.
-Upgrading taxation management.
-Collecting tax arrears and combating tax evasion.
This in addition to simplifying customs measures pertaining to the drawback and tax rebate systems as well as introducing a temporary release system.
-Upgrading customs performance will also be considered under the first drafting of the customs bill which was wrapped up prior to being submitted to the business community.
Moreover, preparations for amending the sales tax, simplifying measures and avoiding dual taxation are underway.
This also includes amending the real-estate taxation system, applying geographical information and reconsidering public resources development duties to ensure that the rich categories would shoulder a bigger burden than the poor.
Public Spending Programs:
ÊÊÊ Elements of these programs are represented in the following:
ÊÊÊ * Making full assessment of commodity stocks in preparation for furnishing specialized geographical stores.
* Avoiding loopholes in the government procurement programs with the aim of securing a full-dressed system for procuring all governmental units' needs.
* Establishing specialized departments at the Ministry of Finance for determining the inflows of expenditures and resources in order to secure efficiency of spending in the State general budget.
* Conducting studies and researches on the activity of the nonofficial economy sector.
Economic Organizations Reform
ÊÊÊ In the framework of tackling distortions in balances between costs and prices, it transpired that there were significant shortages in the resources of those organizations.
For this reason, financial studies have been conducted towards achieving the following goals:
ÊÊÊ * Rationalizing spending in a way that does not impede economies from operation.
* Deepening accountancy on centers of responsibility.
* Rationalizing free services and developing distinctive services.
* Paying wider attention to maintenance and benefiting from untapped potentials.
Public Debt Management
ÊÊÊ In the context of cutting down public debt and its service burdens, efforts are exerted for:
ÊÊÊ * Accelerating repayment of high cost debts.
* Restructuring public debts through expanding the instruments of debt management.
Development of the National Investment Bank (NIB)
ÊÊÊ The financial policy aims at the present time on developing performance of the NIB to play a more active role in social and economic development projects. In this context, efforts are currently exerted towards:
ÊÊÊ * Restructuring assets of the Bank so that it may be capable of confronting its assets and liabilities.
* Linking financing by the Bank for investment projects through conducting economic, financial and technical feasibility studies.
* Restructuring the Bank's assets and liabilities with the aim of cutting costs of the money obtained by the Bank.
* Accentuating training and human resources development in the Bank.