The Egyptian Initiative for Personal Rights (EIPR) criticized the government for the social cost of reducing the budget deficit through decreasing expenditures, the group said in a statement on Sunday.
President Abdel Fattah al-Sisi had rejected an earlier version of the budget and only endorsed it in late June after the deficit was reduced to 10 percent of GDP or the equivalent of LE240 billion. The 10 percent deficit compares to 13 percent in the 2013/2014 fiscal year that just ended.
EIPR said the measures taken to reduce the deficit are lacking economic vision and procedures that are needed to limit its negative effects. These procedures should have included a full revision of general expenditure and its correlation with the ongoing deficit, as well as a comprehensive strategy, including infrastructural problems in the national economy.
In a study, EIPR showed that, while LE48 billion was saved from the budget deficit in an earlier proposal detailing LE292 billion, only LE5.7 billion extra was allocated to networks of social security to protect the poor in the form of social solidarity schemes for extremely low income families.
The saved deficit has also not been translated into an increase in budget allocation for health and education, EIPR said. The organization documented an increase of only 0.2 percent of GDP in health expenditure in comparison with last year’s budget, while the expenditure on education remains the same. In both cases, the current budget allocations remain lower than the constitutional commitments to health expenditure (three percent) and educational expenditure (six percent).
EIPR’s study also slammed the structures for increasing revenue through capital gains taxation, by explaining that no radical reform has been conducted on tax structures to reflect a progressive system. According to EIPR, the main revenue from taxation still comes from indirect taxes on commodities that society at large has to incur as opposed to the wealthier portion of it.
EIPR also expressed reservations over the lifting of energy subsidies on petrol products which benefit the poor and for whom no alternative was provided. For example, no guarantees have been presented for the development of the public transportation sector in response to the lifting of energy subsidies, which would directly translate into increasing transportation prices.
Finally, the study calls for more transparency in the ways in which the new budget will be implemented, especially in light of accelerating economic decisions that mostly affect the poor.
EIPR said that, overall, the budget reflects a government bias toward the rich, with measures such as the lifting of subsidies being implemented immediately, while others like the implementation of a maximum national wage are still lingering.
Other rights organizations have expressed similar concerns regarding the class bias in the 2014/2015 budget. The Egyptian Center for Economic and Social Rights also accused the government of making empty promises of social justice in an earlier statement published in May.