Continuing a long-standing trend, Egypt’s budget for the coming fiscal year will fall below constitutional mandates for allocations to health and education spending.
In the midst of a global inflationary wave and an economic crisis that has hit households in Egypt hard, Finance Minister Mohamed Maiet pledged that the state budget for fiscal year 2023/24 would prioritize the advancement of social protection to help Egyptians face increasing inflation and continue to support activities in the health and education sectors.
However, the new draft budget, which was presented to Parliament last week, shows that the government’s prioritization of health and education allocations has fallen as a percentage of this year’s gross domestic product from its already meager levels in the previous fiscal year. About LE147.8 billion is to be allocated to health and about LE229.8 billion to education, representing 1.25 percent and 1.94 percent of the country’s GDP, respectively.
The 2014 Constitution set a minimum mandate of 3 percent, 4 percent and 2 percent of the GDP for the health, education and higher education sectors, respectively.
While the new draft budget is slim on social protections, it is illustrative of the government’s growing reliance on debt in recent years, with over 56 percent of the new state budget allocated to debt servicing and about 50 percent of government resources planned to come from new borrowing.
Successive cabinets since 2014 have failed to hit the constitutionally mandated mark for the health and education sectors amid austerity measures that the government took as its economy struggled in the wake of two upheavals in less than three years. A US$12 billion loan agreement with the International Monetary Fund furthered the country’s austerity program as the government put more emphasis on reining in its budget deficit and deprioritizing social spending.
Facing criticism for its failure to meet constitutional mandates in FY 2016/17, the Finance Ministry adopted a tabulation method that allowed it to expand what spending on health, education and scientific research entails in their preparation of the budget’s framework.
Explaining this shift, a high-level Finance Ministry source previously told Mada Masr on condition of anonymity that the government uses a more “general and comprehensive” methodology to measure spending on the health and education sectors, explaining that what counts as spending on health and education is not limited to entities specialized in education and health but to other public enterprises and state economic entities’ spending on health and education issues as well, with spending on police hospitals under the Interior Ministry counted as a contribution to the health budget, for example. Debt servicing on projects related to health and education is also accounted for in the final figures, the source said.
This definition differs from the “functional” classification in the general budget, which determines allocations as only those directed to the associated entities.
Per the government’s tabulation in the new draft budget, education spending comes in at LE591.9 billion, 5 percent of GDP, and health comes in at LE397 billion, 3.35 percent of GDP.
Freddy al-Bayadi, a parliamentarian representing the Egyptian Social Democratic Party, told Mada Masr that the party intends to reject the education and health budgets on the grounds of non-compliance with constitutional mandates. But he doesn’t expect this rejection to make much headway, as he expects that the draft budget will pass through the House of Representatives without amendment given the pro-government parliamentary majority.
“Even if we were to accept the government’s definition of spending on health and education, we could not make sure that it is actually being spent in accordance with this definition because the general budget only includes functional spending that was recognized before the government made amendments to the definition,” Bayadi said.
Egypt’s constitution also stipulates that spending allocations on health and education in state budgets should be managed so as to gradually increase to “reach global rates.” However, the start of this incremental and necessary process, as Bayadi notes, seems to be nowhere in sight.
“The crisis in spending on health and education is not only limited to non-compliance with the constitutional mandates, but it also spans the absence of any trend toward increasing spending on health and education as a percentage of GDP, contrary to what is stipulated in the Constitution,” the MP told Mada Masr.
The following graph shows the change in allocations to health and education spending as a percentage of GDP over the last five years, illustrating a downward trend in the new state budget for the third consecutive year.
According to the latest World Bank data, the global average expenditure on health as a percentage of GDP was approximately 9.8 percent in 2019, while the average global expenditure on education in 2020 as a percentage of GDP was 4.3 percent.
