Sunday,22 July, 2018
Current issue | Issue 1293, (28 April - 4 May 2016)
Sunday,22 July, 2018
Issue 1293, (28 April - 4 May 2016)

Ahram Weekly

Budgetary affairs in public

A recent study has set out a roadmap to improve the degree of public openness of the government’s budget, reports Niveen Wahish

Al-Ahram Weekly

April is almost over, yet the Ministry of Finance has not yet presented its 2016-2017 budget to parliament. This is not good for Egypt’s already unenviable position in the International Budget Partnership’s Open Budget Survey, which found that in 2015 the country scored 16 out of 100 in transparency in the group’s Open Budget Index.

It scored eight out of 100 as far as public participation is concerned, and zero out of 100 on budgetary oversight by the legislature because of the absence of a parliament for the past three years.

These were just some of the figures cited by a recent study by the Egyptian Initiative for Personal Rights, an NGO, entitled “Budget Transparency: A Win-win Situation”. The study refers to Egypt’s position on the index to illustrate the need for greater budget transparency, with researcher Salma Hussein pointing out that Egypt’s low positioning means that almost any measures taken will make a difference to its ranking.

The study says that in 2010 Egypt’s position was 49 because it had a lower and an upper house of parliament that could review the budget. However, even then it was not the best-performing Arab or African country because the documents it published were not comprehensive in the information they presented.

Hussein argues in her study that further non-transparent budgets could jeopardise social spending and mean a wider budget deficit and higher public debt, which will in turn reflect on Egypt’s credit rating.

She shows that there is increasing evidence that budgetary transparency can improve fiscal and tax policies, especially as far as inclusive growth is concerned. Multilateral organisations such as the World Bank and International Monetary Fund (IMF) have stressed the importance of transparency and community participation in setting budget priorities.

According to the study, experience shows that Egypt could take huge steps towards more transparency because it possesses some of the factors that push countries towards improving their budgetary transparency and public participation. These include experiencing financial crises that force the government to narrow government spending, as well as accusations of corruption and calls for more transparency and disclosure.

Hussein said that more transparency would improve Egypt’s position on the Open Budget Index, and that a budget that is more responsive to the requirements of citizens would increase confidence between public servants and citizens. The latter would be more understanding of any government inability to meet their needs, and lenders prefer governments that apply participatory policies, she said.

The research notes that the Ministry of Finance has already implemented reforms related to budgetary transparency in the framework of its cooperation with the World Bank, such as issuing a “citizen’s budget,” a simplified version of the budget meant for a non-specialised audience.

However, she points out that more is needed. Not only does Egypt need to upgrade the degree of its transparency and involve various social groups through the different stages of the budget cycle, but it also needs to limit spending outside the budget.

The paper points to the fact that few have the ability to access budget data as it is being prepared, and only experts and specialists see the data after it has been approved by the presidency.

Moreover, there is a delay in making the information available on the ministry’s website, which means that discourse is usually about what the government should have done rather than participation in setting priorities.

The paper says that research has shown that greater transparency leads to better spending on areas such as sewerage, water, housing, education and agriculture. In Egypt, weak transparency and participation can lead to the opposite.

While the government has announced every year its intention to improve social services and focus on inclusive growth, a lack of public participation and supervision have led to the fact that some stakeholders, such as investors who have better access to information, use their leverage to steer the budget in their favour, sometimes against promises to achieve social justice.

The study shows that the 2015-2016 budget does not meet Egypt’s constitutional clause on government spending on health and education. Spending on education stands at four per cent of GDP instead of increasing gradually to reach international levels over three years. The same thing goes for health, where spending has been set at 1.8 per cent of GDP.

The paper says the government has missed the chance for a second year to reach the minimum of three per cent of GDP set out by the constitution for health spending, increasing annually by one per cent to reach the minimum international level of six per cent.

Several stages to improve budgetary transparency are provided by the paper. There is a need to increase disclosure by publishing information in a timely manner and in an internationally recognised format.

In the medium term, more government bodies should be involved, and the Ministry of Finance should announce a time line for reform. This would involve legislative reforms, such as the introduction of a freedom of information act.

In addition, the paper stresses that the government needs to work with NGOs, side by side with the World Bank, to modify the municipalities’ law to allow them to present amendments, prepare their own budgets and oversee their implementation.

These reforms will need time, the researcher says, because they involve more than one government body. Moreover, there must be the political will to involve the public in debates over the budget. Government employees must also be trained to make information available and to engage public discourse.

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