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Al-Ahram Weekly 11 - 17 May 2000 Issue No. 481 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 11 - 17 May 2000 Issue No. 481
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Books Features Interview Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Juggling the pennies
By Sherine Abdel-RazekPaying more attention to the social dimension of fiscal policy, and facilitating the role of the private sector while simultaneously restructuring the tax system and reducing spending on mega-projects are among the government's major priorities, said Minister of Finance Medhat Hassanein during a seminar held last week by the Cairo Centre for Economic Information.
Discussing his first budget outing as minister of finance, Hassanein stressed that the success of the budget for 2000-2001 will depend on the government's ability to increase sources of finance while at the same time averting any adverse effects on the social fabric of the country or on the most disadvantaged of its citizens.
The new budget, consequently, allocated LE44.5 billion to social programmes, including an increase of LE1.2 billion to the pension budget as an additional one million families are included in the social security net. Expenditure on education and the medical sector and subsidies on basic commodities, are all set to increase.
It is hardly surprising that the minister of finance in Egypt's most market-oriented cabinet yet should call for an expanded role for private investment in covering the gap left by the government's retreat in the local economy. The budget deficit of LE10.086 billion, he hopes, might be reduced by involving the private sector more closely in implementing development plans and financing investment, thus reducing the government's need to raise funds from domestic and international sources. According to Hassanein the cabinet has set an investment target of LE80 billion of which the private sector is expected to furnish LE58 billion, that is around 72 per cent of overall investments.
Amid fears of deepening recession and government pledges to settle its own existing debts, the new budget cited several revenue items earmarked for such repayments. And while Hassanein believes that the volume of the debt, as estimated by the contracting companies, has been exaggerated, he appeared keen to stress the government's commitment to maximising its revenues, a major plank of future policy being the complete restructuring of the tax system. Penalties for tax evasion will be considerably stiffer, new training courses for tax-collectors are to be instigated, and basic levels of taxation are to be revised.
The new budget, he pointed out, allots considerably less resources than other recent budgets for spending on major projects, marking a switch in policy to favour investments that will post returns in the short term. The obvious corollary to such a move, he conceded, is that the scheduled completion dates for some major projects will inevitably be delayed.
