Civil society group castigates 2014/15 budget
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The Egyptian Center for Economic and Social Rights (ECESR) issued a statement lambasting the government for issuing the 2014/15 state budget with no public oversight, and without an elected parliament. 

The Cabinet quietly sent the proposed budget directly to outgoing interim President Adly Mansour for approval while all media attention was focused on the presidential election. 

In a statement published this week, the ECESR also reproved the government for making empty promises of social justice, with no actual plans to follow through.

The proposed budget doesn’t fulfill the government’s vows to decrease poverty, improve basic services like education and health, or modernize infrastructure, the statement contended.

What the Cabinet proposed instead will actually be more conducive to increasing the poverty rate, the center argued, pointing to the government’s proposed austerity measures that entail decreased spending on health, education, infrastructure, food and development.

The new budget’s provisions for public spending is a particular hot button issue for the ECESR.

According to the draft budget, public expenditure will reach LE807 billion, with a LE65 billion (10 percent) increase from last year’s budget.

While this number appears to only reflect government spending, it may also include debt payments, the center warned.

Internal debt has long been a budgetary burden for Egypt — according to estimates, that debt could amount to over 90 percent of the national GDP.

The center also condemned the lack of clarity on how the stimulus packages added to the budget in October and January have impacted provisions for state spending in the 2014/15 budget. 

The two stimulus packages included an injection of LE24 billion in January, and a slightly earlier cash infusion of LE30 billion, both of which were pledged last summer.

ECESR also criticized the Cabinet’s failure to account for inflation rates. If calculated properly, the estimated rise in inflation, which now exceeds 10 percent, would show that there will be no actual increase in public expenditure in the proposed budget, the center claimed.

“The 2014/2015 budget sees no development from previous budgets in terms of general allocations for health and housing, or in terms of succeeding to increase resources without resorting to debts,” read the statement. 

ECESR added that the government is intent on continuing down the road to austerity, as it slashes funding for fuel products, development in Upper Egypt — decreased by 44 percent from last budget — and housing support for low-income brackets, decreased by 50 percent from last budget. 

While expenditure on health has increased by a small margin, spending on education has proportionally decreased by a small margin, which the center claims is in fact unconstitutional.

The 2014 Constitution ratified in January stipulates that health and education spending should each amount to no less than 3 and 4 percent of the GDP, respectively, and should gradually increase. As it stands in the 2014/2015 budget, health and education expenditure are at 2 percent and 4.3 percent, respectively.

ECESR also pointed to the government’s pledge to build 1,000 schools through a public-private partnership. No details have been made available about this project, such as the kind of schools to be built, their affordability given the private sector’s involvement, and how they fall within a broader context of educational reform, the center argued.

Another of the government’s empty promises concerns taxation, said the statement. The Cabinet has failed to provide any details regarding increasing the base of taxation, which has been a repeated pledge by the successive governments that have been in place since the January 25 revolution.

According to the center, increasing the base of taxation could either mean increasing the number of tax payers, or items and dealings on which taxation is imposed. But none of these issues have been tackled by the non-elected interim government, the center said, which instead has focused on preparing a secret draft law on Value Added Tax, which puts the taxation burden on the wider public.

With revenue put at LE516 billion in the new budget, a decrease from the previous budget, there seems to be no intention to implement a change in the base of taxation. Meanwhile, debt — of often unspecified origins — seems to be the alternative source of revenue, with LE140 billion added to the revenue allocations in the new budget, coming from unspecified loans and grants.

Reforming the tax base aside, the center estimated LE40 billion in losses annually from tax evasions and corruption. 


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