Wednesday,26 September, 2018
Current issue | Issue 1317, (27 October - 2 November 2016)
Wednesday,26 September, 2018
Issue 1317, (27 October - 2 November 2016)

Ahram Weekly

Shedding extra expenses

At a time of economic austerity the government is setting an example by living within its means, reports Sherine Abdel-Razek

Al-Ahram Weekly

The government has been tightening its belt. This week the cabinet approved decisions by the ministerial economics committee to rationalise and reduce expenditures in the budgets of all ministries, governmental bodies and units of the state administrative apparatus by 15 to 20 per cent.

Salaries and investments are excluded from the decisions. 

Moreover, the cabinet decided to downsize Egypt’s diplomatic missions abroad by 50 per cent, also in order to limit expenses.

Egypt’s budget for the current fiscal year 2016/2017 carries a projected deficit, the gap between limited revenues and spiralling expenses, of LE305 billion, or the equivalent of 9.9 per cent of GDP.

Government expenditures include salaries, public investments, subsidies, debt services and spending on goods and services. The new decisions will cover expenditures under the last item only. 

Inflated government spending on this item have long been criticised, and calls to rationalise it have been heard for more than a decade. 

“We have long heard of exaggerated expenses to cover the costs of trips abroad by senior officials and ministers, or for buying them new cars or renovating their offices,” commented Ihab Al-Dessouki, a professor of economics at the Sadat Academy for Management Sciences in Cairo. 

“No one really knows the value of such expenses, but I believe the savings under the new plan could be tens of billions of pounds,” he added. 

Examples of such expenses are endless. Last month, the local media reported a minister refusing to take her flight to London after discovering that her ticket was in economy and not business class. The difference in cost between the two categories is around LE3,000 for a short flight and could reach as high as LE10,000 for long ones.

A report by the Parlamany news site published pictures of several ministers leaving their cars in front of parliament last month. Most of the cars were new models from expensive brands like Mercedes, BMW, Jeep and Pathfinder, each of which would cost some LE300,000.  

Commentators have long criticised the expenses of Egypt’s commercial representation offices abroad, considering them to play an only intangible role in promoting the country as a tourist or investment destination or to increase exports. 

“The idea of reducing such extravagant items and not touching salaries or investments is the right one. We should not touch salaries amid the current economic hardships. As for investments, these should increase as they feed economic growth,” Al-Dessouki said. 

A note issued by the Egyptian Centre for Economic Studies (ECES), an NGO, hailed the moves, considering them to be a step towards tightening the budget deficit and channelling government revenues to education and healthcare. 

The constitution states that government spending on healthcare and education should be at least four per cent of GDP and three per cent of GDP, respectively, but the actual figures have fallen short of these conditions.

The ECES note called for setting up departments in state bodies to monitor spending on utilities like electricity and water in addition to increasing the frequency of maintenance to lower the cost of assets depreciation. 

Both Al-Dessouki and the ECES called for minimising the number of consultants recruited by state bodies. A stark example is the Ministry of Transportation where 18 consultants were appointed by a former minister with salaries ranging between LE20,000 and LE35,000. Most of the consultants were over 60 years old. 

Another suggestion offered by the ECES was to adopt performance budgets, which reflect the input of resources and the output of services for each sector or ministry. This type of budget is commonly used by the government to show the link between the funds provided and their outcomes in order to measure the efficiency of the service provider concerned.

In order to be implemented, the austerity plan should be translated into a set of executive procedures, the ECES said. Mohamed Maeet, the deputy minister of finance, told Al-Youm Al-Sabei that full details of the decisions would be sent to all the ministries within the next few weeks. 

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