Coronavirus hits Egypt’s budget as crisis in funding looms large

Coronavirus hits Egypt’s budget as crisis in funding looms large
Coronavirus hits Egypt’s budget as crisis in funding looms large

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Jeddah - Yasmine El Tohamy - CAIRO: The general budget of the Egyptian state will be affected by the repercussions of the coronavirus pandemic as revenues will drop while expenditures will rise, according to Minister of Finance Mohamed Maet.

“But we will not touch the items of payments, pensions, food supply and the fund takafol wa karama (interdependence and dignity) as well as other expenditures that must be provided to simple citizens,” Maet said in parliament.

He acknowledged there was a crisis in funding and said production must resume to raise growth rates and to fulfill the needs of citizens.

During a meeting of the planning and budget committee in parliament on Tuesday, Maet discussed the overall outlook of the state’s general budget for the fiscal year 2020/2021.

He told the committee that the budget aims to achieve a balance by cutting down on expenditures without affecting citizens. He said that despite the effects of the coronavirus, the government was using all possible tools to rationalize spending without affecting people and while maintaining the state’s commitments.

Maet said that the draft budget was expected to have a 6.2 percent targeted total deficit. However, the total deficit is expected to go up 7.8 percent if the crisis does not end by Dec. 31, 2020.

He said that the original target for the public debt in the state’s general budget for the fiscal year 2020/2021 was to reach 83 percent of gross domestic product (GDP). However, he said that the rate was expected to rise to 88 percent of GDP due to the economic repercussions of the pandemic.

Economic expert, Mohamed Tewfik, said that the huge impact on the state budget was due to outstanding monthly losses. “The state has borne the brunt of losses of around 100 billion Egyptian pounds ($63 million) in one month due to its decisions to alleviate the burdens that resulted from the effects of the coronavirus,” Tewfik said.

Tewfik said that the tourism sector suffered losses of about $15 billion and that the damage in this sector had affected the state since it employed about half a million people who pay their taxes and insurance directly to the public treasury. Taxes, including value added tax, are also imposed on tourist activities.

Tewik said that the only way to survive the crisis was to resume production, but in accordance with the state’s precautionary measures.

Economic researcher Amira Gad said that the best way to cut the budget deficit was to find resources by increasing investments in drinking water, sewage, roads and home gas supplies while making sure that the public did not suffer from the extra financial hardships.

The Ministry of Finance is scheduled to announce the state’s general budget for the fiscal year 2020/2021 in June, with a total expenditure of about 1.7 trillion Egyptian pounds ($107 billion) and total revenues of about 1.3 trillion pounds ($82 billion), according to financial statements.

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