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MPs, experts challenge draft 2010/11 budget
Published in Almasry Alyoum on 08 - 05 - 2010

On 3 May, Egypt's Shura Council gave its tentative approval to a draft of the 2010/2011 state budget. Critics, however, say the draft neglects the most important sectors--including public health and education--while allotting far too much to less beneficial programs, particularly export promotion.
"The large amount earmarked for export promotion is sure to help out wealthy exporters, but it will hardly benefit limited-income brackets of the population," Hamdi Abdel Azim, economy expert and former head of the Cairo-based Sadat Academy, told Al-Masry Al-Youm.
According to Egypt's official State Information Service, the draft budget puts government revenue at LE258.95 billion for the period, compared to LE285.41 billion in the 2009/10 fiscal year. It also allots LE95.61 billion for public sector workers' wages and compensations, up from LE85.99 billion the year before.
Shawqi el-Sayyed, head of the councils' legislative committee, was quoted as saying on 4 May that the draft budget aims "to create social justice for all, income equality and encourage investment."
Some LE116 billion has been earmarked for state subsidies, mostly for energy (LE67 billion) and foodstuffs (LE13 billion), compared to LE95.17 billion in the previous budget.
The proposed budget also anticipates an LE106 billion deficit for the 2010/2011 fiscal year, compared to an LE98 billion deficit for the current fiscal year.
“Budget deficit projected at 7.9 percent with a reduction of 0.5 percent of GDP over this year's budget deficit,” Finance Minister Youssef Boutros-Ghali was quoted as saying by Bloomberg on 24 March, the same day the draft was approved by the cabinet under Prime Minister Ahmed Nazif.
Currently being debated by the People's Assembly, the draft has, however, met considerable criticism from certain quarters. For one, critics--including, notably, several ruling party MPs--have demanded that the LE4 billion earmarked for export promotion be vastly reduced.
"At least half of this huge sum, which exporters have received for the last four years, has gone to waste," Abdel Salaam Wanoos, MP for the ruling National Democratic Party (NDP) declared at the 3 May Shura Council session. "And it has largely gone to those who don't deserve it."
"People are staging demonstrations--just outside the Shura Council building--for LE100 pay raises," Wanoos added. "Meanwhile, the government is subsidizing wealthy exporters to the tune of LE1 million in some cases."
NDP secretary general for Cairo Mohamed el-Ghamrawi, for his part, urged that the amount be halved to LE2 billion, and that the remainder be put towards the public health and education sectors.
Boutros-Ghali, however, defended the proposed allotment, pointing out that Egyptian exports had doubled in recent years because of export-support subsidies. He went on to claim that the number of Egyptian export companies had increased tenfold within the last four years as a direct result of the support.
During the session, Boutros-Ghali asserted that those export companies that had received funding without using it to boost exports were "being investigated."
Despite the finance minister's reassurances, however, Abel Azim remains skeptical.
"The amount earmarked for export promotion won't contribute to increased production or create job opportunities--it won't even help boost exports," he said. He went on to say that the large export subsidies represented "a form of compensation for exporters for losses incurred due to decreased exports as a result of the global financial crisis."
The inordinate amount, Abel Azim added--echoing a common belief--"would have been better spent on things that all Egyptians could benefit from, such as improved education and health services, water projects, or bridge and road maintenance."
The People's Assembly is expected to vote on the draft budget later this month.


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