Egypt's draft budget for FY 2020-2021 has set the price of oil at $61per barrel, Minister of Finance Mohamed Moeit said in a Monday statement. The statement also revealed the new budget's features, adding that the dollar exchange rates in the new budget were set according to the average over the first half (H1) of 2020. The price of oil sank to levels not seen since 2002, as demand for crude oil collapsed due to the ongoing coronavirus pandemic. Brent crude fell to $22.58 per barrel on Monday, its lowest level since November 2002. The price of US West Texas Intermediate (WTI) fell below $20 per barrel, close to an 18 year low. Egypt's budget draft for FY2020-2021 ensures the continuation of the political leadership's directives to improve the standards of living, Moeit said. This will be done through enhancing public services, and strengthening social protection initiatives particularly in the neediest areas. Moeit added that the new budget reflects the state's desire to move forward in completing the economic and social reforms, and reducing debt and deficit rates. The government will boost productive activities, stimulate industry, and expand the export base, he asserted, noting that next FY2020-2021 will witness a lower value of debt service in comparison of current FY2019-2020. The Ministry of Finance aims to reduce the total deficit of the GDP to 6.3%, achieve a primary surplus by 2%, and increase government investments to EGP 280.7bn to boost its economic contributions. The ministry is also looking to continue improving on infrastructure and creating an attractive environment for investment, Moeit said. Total expenditures in the new budget will be at EGP 1.710tn while revenues will be at EGP 1.3trn, Moeit mentioned. State employees' wages will increase by 11.3%, to a total expenditure of EGP 335bn next FY2020-2021, up frmo from EGP 301bn in the current FY2019-2020. The new budget will take into consideration increasing the medical allowance for doctors by 75%, Moeit added. He noted that health and education expenditure will increase according to the Egyptian constitution. Health allocations will increase by EGP 23.4bn in the FY2020-2021 to EGP 95.7bn, he explained, adding that education allocations are EGP 46.7bn. In addition, scientific research allocations come in at EGP7.8bn. The value of subsidies is planned at EGP 326.3bn, of which EGP 19bn has been allocated to social security pensions and the Takaful and Karama programme. A further EGP170bn has been allocated to the National Authority for Social Insurance. This is in addition to a 70% increase in the social housing subsidy to EGP 5.7bn, to expand base of the beneficiaries of social housing units. The government plans to expand its support for exporters by providing EGP 7bn, Moeit said. He added that EGP 4bn has been allocated to raising the tax exemption limit from EGP 8,000 to EGP 15,000, and reduce the work-tax for low and middle classes.
