The Ministry of Finance has begun a series of discussions on the pre-budget statement issued earlier in March.
“Releasing this statement to the public is an indicator that the government is serious about building trust and transparency, especially as it comes after issuing the ‘citizen budget,’ a simplified version of the public budget that enables all citizens to discuss it,” said Hossam Abou Doaa, deputy manager of the World Bank Office in Cairo at a meeting organised by the Ministry of Finance to discuss the pre-budget statement.
“This step means the government is sharing information and giving citizens the opportunity to give feedback and modify financial priorities,” he added.
The concept of budgetary transparency has been receiving international attention as an indicator of democratic development and a tool to eliminate corruption.
In a packed room at a five-star hotel in Cairo, the Finance Ministry organised the event in cooperation with Egyptians without Borders, an NGO, and the Arabic Programme for Human Rights Activists, a campaign group.
Political parties, NGO representatives and the media were also invited to take part.
Minister of Finance Hani Kadri said the delay in electing a new parliament could affect budgetary transparency.
To counter this, the ministry was taking measures to spread information about the budget and financial policy by issuing the “citizen budget,” he said, as well as holding public discussions of the pre-budget statement and making more data available on its Website.
According to the 2012 international budget transparency index, Egypt’s score deteriorated from 49 out of 100 to 13, putting it among the worst countries for the availability of information.
A study of budgetary transparency by the Egyptian Initiative for Personal Rights, an NGO, published in December said the deterioration was a result of the absence of a parliament during most of the period covered by the index.
This meant there was no effective oversight, the report said.
At the meeting, the minister said the pre-budget statement for the next fiscal year would be released in December. This would be its annual date, he said, allowing citizens the time to discuss priorities for fiscal policy and to express their views.
Releasing the pre-budget statement and discussing it with civil society would contribute to improving Egypt’s position on international measures for budgetary transparency, said Mohamed Mansour, programmes manager at the International Budget Partnership.
The International Budget Partnership collaborates with civil society around the world to analyse and influence public budgets in order to reduce poverty and improve the quality of governance.
“The next step is to move to the programmes and performance budget. The constitution obliges us to spend a lot on public health and education. We need to know that this amount of money is being spent in the right places,” the minister said.
The Egyptian Initiative study does not only emphasise the importance of the availability of information, but also sheds light on the contents of the budget. Giving expenditure figures without meaningful breakdowns was not a way of encouraging discussion or supervision, it said.
Excluding the economic authorities owned and run by the state from the budgetary figures was another example of the obstacles facing transparency.
The finance minister explained the main points in the pre-budget statement, emphasising the framework of fiscal policy and the goals the government was targeting in the medium term.
One of the guidelines for the coming year is to guarantee a balance between growth and social justice. “We have reduced subsidies for energy, but we have also set a minimum wage and created programmes like ‘Takafol’ and ‘Karama’ that give cash transfers to the poorest families,” he said.
Salwa Al-Antari, former manager of the research department at the National Bank of Egypt and head of the economic committee of the Egyptian Social Party, considered the publication of the pre-budget statement to be a positive step.
“But the policies included in this statement are based on a series of laws that were issued lately without any sort of public discussion,” she said.
Many laws have been approved over the past month and before the Egypt Economic Development Conference held in Sharm El-Sheikh on 13 March, including the investment law, the civil service law and the amendments to the taxes law.
Al-Antari said the government was being “generous” to businessmen and high-income citizens, but firm towards ordinary and low-income citizens.
“Since the changes in the taxes law were not discussed, we do not know why the five per cent taxes that were imposed on the wealthiest exceptionally for three years were then suddenly cancelled after less than one year,” she said.
It was also not clear why the highest level of taxes was reduced to 22.5 per cent on persons and companies, down from 25 per cent. In contrast, the tax exemptions for lower-income people have not been raised, and the annual pay rises for government employees will be taxable according to the new civil service law.
The pre-budget statement emphasises the involvement of the private sector in providing public services previously provided by the government, such as electricity, water and sanitation, through public-private partnerships (PPPs).
“It is obvious that the state has financial problems and a budget deficit, but we should not accept PPPs as a back door for services privatisation,” Al-Antari said, adding that this could mean the growth of private-sector monopolies.
The government has not completed its budget proposals, Kadri said, even though the constitution says the budget should be submitted to parliament 90 days before the new fiscal year which starts in July.
Members of civil society have asked for a commitment to such a schedule, even if there is no parliament, because the absence of a representative body makes it more important than ever to discuss the budget through the media and civil society.
Since the 25 January Revolution, budget proposals have not been approved by the parliament, but instead by the president who has legislative powers in the absence of the parliament.