Exclusive| Experts Debate Over Education and Health Allocations in New State Budget

Updated 6/5/2024 10:25:00 AM
Exclusive| Experts Debate Over Education and Health Allocations in New State Budget

Arab Finance: Experts are divided over the allocations for education and health in the state general budget for FY 2024/2025, recently approved by the Parliament.

Some experts see the new state budget as transparent for reflecting reality, while others believe it did not meet the constitutional requirements set by the Egyptian Parliament.

Commenting on the recently approved state budget, Ahmed Shawky, an economic expert, told Arab Finance in an exclusive statement that the allocation for education and health is insufficient and falls short of the constitutional percentages.

As per Egypt’s 2014 constitution. The state is obliged to allocate no less than 6% of the gross domestic product (GDP) for government spending on pre-university and higher education and 3% for health spending, which was not met in the new budget.

According to the state budget statement, spending on health in the new fiscal year represents 1.16% of the GDP, while spending on education represents 1.7%, which is less than half of the constitutional entitlement for each sector, Shawky added.

Debt burdens and wages

Shawky also explained that the largest portion of the state's general budget is debt burdens and wages, with a significant reliance on tax revenues.

He emphasized that the focus should have been on non-tax revenues such as mines and other sources of revenue that generate a return for the state.

Despite the increase in the wage bill under the new budget, the economic expert said inflation also increased and will increase during the coming period.

Therefore, he is wondering whether the new increase in wages parallels the increase in inflation, especially with the trend towards lifting subsidies on electricity, natural gas, and petroleum materials and the increase in the price of subsidized bread.

Industrial projects

Shawky urged the government to use debt in revenue- generating projects that generate revenues, such as industrial projects, which are the solution now to pump more revenues to Egypt.

These projects will also work to trim imports and boost exports in light of the large gap between them, he noted.

On the other side, Yasser Omar, Deputy Chair of the House of Representatives’ Planning and Budget Committee, believes that the new budget is within the limits of Egyptian capabilities.

Moreover, Omar noted to Arab Finance that, for the first time, the new budget includes the revenues and expenses of 59 economic authorities, which were not included in the budget before, thus contributing to improving the state’s overall financial indicators.

Boosting allocations for health and education

Omar stated that financial allocations for health and education have witnessed a hike in the new budget.

The health sector has the largest share in the new budget, exceeding constitutional percentages of 18.5%, he said, noting that health allocations amounted to EGP 496 billion.

Meanwhile, allocations total EGP 565 billion for pre-university education, EGP 293 billion for higher education, EGP 140.1 billion for scientific research, and he added.

The allocated sum by the government to the health, education, higher education, and scientific research sectors for FY 2024/2025 represents an increase of about 7.1% over the stipulated constitutional entitlements, Omar asserted.

For his part, Minister of Finance Mohamed Maait praised the new budget following parliamentary approval.

Maait highlighted a 29% increase in public expenditures in the upcoming FY budget, reaching EGP 3.87 trillion. This accounts for 22.6% of the GDP for the next FY, compared to the results expected by the end of June 2024.

Furthermore, the minister referred to the increase in wage allocations to EGP 575 billion, versus EGP 494 billion in the expected results for the FY 2023/2024, to accommodate the latest package scheduled for state workers.

This package included a 50% raise in the minimum wage to reach EGP 6,000 per month. The minimum salary ranges from EGP 1,000 to EGP 1,200 based on the job grade.

In a statement released on June 4th, Maait confirmed that the new budget for FY 2024/2025 focuses on continuing human development efforts in its two axes: health and education.

It also focuses on supporting economic activity, especially the productive sectors of industry, agriculture, and export, in addition to social protection for the neediest groups, and improving the standard of living of middle-income people.

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