Despite the measures the government has adopted to cope with the wave of surging prices and the repercussions of the Russia-Ukraine war, it has decided to increase spending on social protection in the new 2022-23 draft budget presented to the House of Representatives, the lower house of Egypt’s parliament, in late March.
Allocations for the wages and compensations section in the new budget rose from LE318.8 billion in 2021-22 to LE400 billion divided into LE36 billion on wages, LE38.5 billion on pensions, LE8 billion on tax exemptions, and LE2.7 billion on the Takaful and Karama (Solidarity and Dignity) social-protection programmes, an increase of LE450,000.
The draft budget allocates LE332.1 billion for subsidies, grants, and social privileges, up from LE263.8 billion in 2021-22.
The government has been careful to widen the umbrella of social security protection by increasing the number of beneficiaries of the Takaful and Karama programmes and intensifying work on the Decent Life initiative in impoverished villages and on the Lifeboats initiative meant to raise awareness of the dangers of irregular migration.
It aims to lower unemployment rates by providing five million job opportunities in national projects.
The government has also decided to allocate LE5 billion to appointing 30,000 teachers and 30,000 physicians and to dedicate LE1 billion to promotions.
Egypt is the world’s largest importer of wheat from both Russia and Ukraine, and amid the global hike in prices the new draft budget allocates LE95 billion to bread subsidies. The value of the allocation compares to the LE87 billion the previous year and means that the government does not intend to move from in-kind subsidies to cash subsidies as planned earlier.
At the same time, the government has begun pinpointing the objectives of the state’s investment plans for the next fiscal year, focused on supporting Egyptians through the establishment and development of 36 hospitals, the provision of 1,500 new intensive care beds, and the establishment of 27 new desalination plants and 115 water-treatment plants.
The plans also include the construction of 25,000 classrooms in schools to decrease the number of students in each class.
Alia Al-Mahdi, a professor of economics at the Faculty of Economics and Political Science at Cairo University, said that increasing spending on social protection was necessary because the middle- and lower-income classes had borne the brunt of the economic reform measures applied since 2016.
She added that the government was responsible for providing all kinds of support to these groups and suggested replacing in-kind subsidies with cash subsidies.
Mustafa Salem, deputy chair of the Planning and Budget Committee in the House of Representatives, said the government’s inclination to adopt radical measures had necessitated a review of some sections of the draft budget, excluding social protection.
The committee suggested reviewing the rights of entities included in the general budget, such as units of the state’s administrative apparatus, public-service bodies, and 648 local administration bodies, with the aim of integrating units with similar functions under one umbrella as a means to cut costs.
In addition, the committee proposed reformulating some ministries’ responsibilities to achieve optimal results and make best use of the allocations dedicated to them in the general budget.
It requested that officials be made accountable for any decisions that could be shown to result in wasting public money.
Salem said that some ministries had appointed a large number of expert advisers and more-than-needed representatives on diplomatic missions and in consulates. He called for limiting the number of officials to those with needed expertise.
Thorough studies should be carried out on projects before implementing them to measure their economic and social repercussions, whether they are funded from the state budget, loans, or grants, he said.
Plans to deal with the financing, organisational, and administrative challenges that might arise during the implementation of projects should also be set in motion, he concluded.
*A version of this article appears in print in the 7 April, 2022 edition of Al-Ahram Weekly.