What an excuse! Egypt to keep old budget due to 'time constraints'
The government may resort to using the old budget for the current fiscal year until the budget for the upcoming fiscal year, which begins on 1 July, is completed, according to a cabinet source. The measure will be done to save time, but the old budget will only be used during July, the source added.
The government is racing against time to complete the process of reviewing the budget for the next fiscal year, after President Abdel Fattah Al-Sisi refused to ratify it due to the growing deficit and heavy spending. The government only has five days left to craft a new budget.
The cabinet source did not rule out that the government may consider imposing a one-time tax on the wealthy, which will come with a review of a reduction of energy subsidies. It will focus on increasing resources, especially those that are taxed, in order to control the budget deficit.
The cabinet source added that the prime minister listened to each minister’s vision as to how to reduce the budget deficit, maximise revenue and lessen expenses, during a weekly cabinet meeting which took place on Wednesday.
The source added that President Al-Sisi did not approve the draft budget on Tuesday despite the fact that it contained reforms, which “disturbed the government’s plans”. Now, the government is seeking to develop mechanisms to ensure the implementation of the proposed reforms and add other contributions to reduce the deficit, including fighting against tax evasion and restructuring state assets to increase budget revenues.
The new budget undertaken by President Al-Sisi would cut energy subsidies and impose additional taxes on capital gains, cash dividends and income.
Sources said that the government is now struggling to develop mechanisms to ensure that reforms are implemented.
The government has reduced energy subsidies by EGP 34bn in the budget currently under review.
Egypt is seeking to reform subsidies by launching a smartcard system to monitor fuel consumption at fuel stations and adjust the bread sale system to monitor distribution with gradual changes in gas and diesel prices.
The Egyptian economy suffers from various difficulties including a large budget deficit, weak currency, and worsening public debt set to jump to EGP 2tn. Economic growth has slowed due to the exodus of foreign investors and tourists over the past three years, both major sources of foreign currency for Egypt.
“The Minister of Investment revealed a plan to reform the public business sector to allow for a revenue increase and convert it from a source of loss to one of profit. This will help lift the burden on the State Treasury, allowing for its employees’ wages to be paid and reducing government expenses,” said the cabinet source. Investment Minister Ashraf Salman declined to comment, saying that the budget is still under review.
- 8-year-old Yemeni child dies at hands of 40-year-old husband on wedding night
- German investor tells all: Why Egypt's political unrest is not an excuse for its faltering economy
- Monnot Theater tells tale as old as time with Beauty and Beast ballet
- UK's former investment director in Egypt, John Franck, reveals what scares British investors the most about Egypt