The launch of a position paper titled "Despite expected continuity of the pandemic, Covid-19 is missing in government fiscal plans" at the beginning of the new fiscal year 20/21

Press Release

1 July 2020

Today, the Egyptian Initiative for Personal Rights (EIPR) issued a position paper titled: "Despite expected continuity of the pandemic,  Covid-19 is missing in government fiscal plans" at the beginning of the new fiscal year, on the first of July. The paper analyzes the government spending plan for 2020/2021, and how these plans reflect the government’s disregard of the effects of the Covid-19 on the living and health conditions of Egyptians, while Covid-19 continues to spread for several months to come, as scientific estimates indicate. In addition, these plans show how the government is missing an opportunity to reform some fundamental imbalances in the spending structure, which the outbreak of Covid-19 clearly revealed.

In the year of the pandemic, as the World Health Organization called it last March, when millions lose their jobs and their basic living, the government chooses to cut spending on food subsidies. Despite the exhaustion of the health system, headed by doctors and nurses in government hospitals, the government chose to complete its neglect of the constitutional minimum spending on health. At a time when tens of billions go to the support of unknown government institutions, and the reasons for their support are not announced, at the expense of social spending, the government's plans for the fiscal year 2020/2021 do not reflect its preparation to finance the burdens of the continuing pandemic for next year.

The paper attempts to evaluate the general budget project, in light of the little information published about it, to answer the following questions:

First: To which degree was the government responsive to dealing with the pandemic as the most important health challenge facing countries today?

The answer is: by tracking public spending, comparing it to previous years, in addition to comparing the change in health spending to counter the Covid-19 in Brazil, the emerging country is one of the worst countries to respond to the pandemic.

Second: What measures is the government planning to take to reduce the social impact of the pandemic and partial curfews? How much does it cost in the public budget? This is done by comparing the expected and the available general budget data.

Third: How does the government justify its failure to comply with the constitutional aspect of spending on education, health, and scientific research?

The paper concludes that the government's priorities and plans for the fiscal year 2020/2021 do not take into account the outbreak. The government missed the opportunity to take the Covid-19 outbreak to correct government imbalances.

The paper reviews two aspects of government spending: the first is spending on health compared to other government sectors, the worst response to the pandemic in emerging countries, and the constitutional minimum for health spending.

To conclude that, the government did not disclose the details of most of the increase in spending on health, and the continued weakness of this spending.

 "How can the government decide to reduce the food subsidy system support with about four billion EGP? And why keep the same amount allocated to the Takaful programs (almost without any increase), without any consideration for inflation or for the fall of many families below the poverty line due to the economic repercussions of the pandemic?", This is the type of questions raised by the budget analysis this year, as stated in the paper.

In the last week of June, Parliament approved this general budget without significant amendments, adopting the same approach of non-scrutiny, and ignoring constitutional allocation for spending on education, health, and scientific research, ignoring the views of economists, civil society, and local communities in preparing the budget and in prioritizing it. EIPR draws attention to the following points:

  • By focusing on the services sector, especially the health sector and spending on subsidies, grants and social benefits, when the government decided to spend 100 billion EGP to reduce the social and economic impacts of the spread of Covid-19, the share of the family sector in this package was too little to nothing.

  • No concrete incentives to stimulate domestic demand by increasing the income available to Egyptian families in plans and budgets for the coming fiscal year:

1. The government has not directed the resources needed to reach or to approach the constitutional minimum spending on health.

2. Parliament agreed to cut food subsidies.

3. No additional plans were developed for additional unemployment compensation during the fiscal year beginning next July.

  • Also, it should be noted that government institutions and banks receive a large part of government support and there is room for studying the reasons for this and avoiding recurrence and abuse.

  •  There is an imperative need to review the degree of transparency and clarity of public budget allocations, to allow citizens to track government spending, and undertake independent analysis and evaluation.