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Al-Ahram Weekly 30 March - 5 April 2000 Issue No. 475 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 30 March - 5 April 2000 Issue No. 475
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Special Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Slashing public debt
By Gamal Essam El-DinThe People's Assembly and Shura Council are scheduled to discuss the first budget of the current government, and of the century. In an address to the People's Assembly on Saturday, Prime Minister Atef Ebeid said that the 2000/2001 budget will increase public spending to LE111.7 billion, compared to LE99.4 billion last year. Revenues for the same period are estimated at LE108.2 billion leaving an estimated budget deficit for the new fiscal year will of LE3.5 billion, or one per cent of GDP.
According to Ebeid government expenditure, which exceeds LE100 billion for the first time in Egypt's history, will be financed mainly by self-procured financial resources -- including customs, taxes, Suez Canal and oil sales revenues.
"We have promised that we will not be dependent on foreign loans. And foreign grants will be never be allowed to exceed one per cent of the total budget," Ebeid said.
Ebeid revealed that social services and subsidies earmarked for the poorest members of society will account for LE44.5 billion, or 40 per cent of the total figure, compared to LE39 billion in the 1999/2000 budget.
Ebeid said that his cabinet's first policy statement, delivered before the Assembly last December, had been based on a 14-point social programme aimed at alleviating the poverty of limited-income groups. Over the past two months, though, opposition parties had criticised Ebeid's social programme as being over-ambitious and under-funded.
"In the new budget," Ebeid said, "we have earmarked LE2.04 billion specifically to the programme. A monthly pension of LE50 will be extended to families without a breadwinner, seasonal workers will be eligible for soft-loans to assist them in developing income-generating activities, as will university graduates, while 650,000 new jobs will be created."
The budget allocates an extra LE3.5 billion for the payment of government salaries, Ebeid revealed, much of which will go into the creation of the 650,000 jobs to which the government is committed. "Over the past few months, 111,000 young people have been appointed. We are now in the process of appointing the remaining number," he said.
The new budget also aims at rationalising public expenditure through several measures. The most controversial is likely to be the announcement that the budget of as many as 67 economic authorities is to be separated from that of the state. The debts incurred by these authorities, Ebeid argued, have attained alarming levels. The separation, said the prime minister, will release an extra LE16 billion, much of which would otherwise have been used in servicing the debts incurred by the authorities. The government will also be relieved of LE2.8 billion currently paid to the economic authorities in subsidies.
Insisting that the financial restructuring of economic authorities would lead to an improvement in their performance and thus not negatively impact on current levels of subsidy, Ebeid stressed the fact that his government remained committed to the maintenance of key services. Egyptian National Railways (ENR), the largest economic authority, has, for example, been allocated a LE1.6 billion subsidy in the new fiscal year.
The suggestion to transfer supervision of the National Investment Bank -- to which the economic authorities are mostly indebted -- from the Ministry of Planning to the Ministry of Finance, had been publicised before the prime minister's announcement to parliament. Domestic debts, Ebeid revealed, have reached LE147.1 billion, "borrowed primarily to fund the implementation of development plans." Foreign debts, he also announced, amounted to $28.2 billion as of this month.
"The budget has allocated $1.2 billion (nine per cent of existing foreign exchange reserves) to paying this year's installment. All in all, this amount must be paid over 26 years."
The bill to pay for the day-to-day running of government is to be reduced from last year's 3.9 per cent of total public expenditure to 3.7 per cent in the new budget, or a total of LE4.2 billion.
To protect foreign reserves the government does not intend to spend "a single dollar" on financing government purchases of foreign goods as long as local production is available, nor does the budget include any allocations to establish new projects until those currently under construction have been completed. "Half-implemented projects will require LE5.9 billion to be completed," said Ebeid.
One of the government's major objectives, said the prime minister, is to encourage greater private investment in effecting development plans. The government is, therefore, looking for some LE5.7 billion worth of input from the private and cooperative sectors, while the new budget allocates LE13.9 billion for the completion of the infrastructure of mega projects. A further LE8.3 billion has been earmarked to finance the investments of public sector agencies and economic authorities.`
