Continuing Reforms, Boosting Growth Rates & Enhancing Social Security Programs are Main Targets of State's New General Budget, announces Minister of Finance in 2017/2018 Disclosing Conference on Pr...

  Continuing Reforms, Boosting Growth Rates & Enhancing Social Security Programs are Main Targets of State's New General Budget, announces Minister of Finance in 2017/2018 Disclosing Conference on Preliminary Budget Statement   ·         Our objective is to boost the upcoming FY investments to 646 billion EGP; where the private sector shall provide for 55% thereof. ·         A package of measures and programs are currently being studied to alleviate reform burdens sustained by citizens. ·         The government is committed to pay debts of foreign partners at oil sector to increase their investments and exploration works.   Dr. Mohammed Maait, Vice Minister of Finance for Treasury Affairs, highlights: ·         2.2 billion EGP to be deducted from total proceeds of the value added tax on cigarettes in favor of the health insurance system   Mr. Ahmed Kouchouk, Vice Minister of Finance for Fiscal Policies, announces: ·         Our target, for the 1st time in 10 years, focuses on achieving primary surplus by 11 billion EGP in the next FY State budget. ·         Suez Canal recorded revenues worth 66 billion EGP, public banks worth 8 billion EGP, government's bond programs worth 6 billion EGP and economic authorities worth 5 billion EGP   Mr. Amr Elmonayer,Vice Minister of Finance for Tax Policies, announces:   ·         One million real estate transactions were executed within the last two months and taxpayers are being monitored to ensure their commitment.  ·         Real estate tax proceeds surged by 130% and tax revenues amounted to 201 billion EGP over the 1st 8 months of the present FY.  ·         Tax dispute settlement committees resolved 1000 disputes with total proceeds of 1.750 billion EGP.     Minister of Finance, Mr. Amr Al-Ghary, launched a third conference that offered a community dialogue on the preliminary financial statement of the State's next FY general budget.  Participants in the conference were Dr. Mohammed Maait, Vice Minister of Finance for Treasury Affairs; Mr. Amr Elmonayer, Vice Minister of Finance for Tax Policies; Mr. Ahmed Kouchouk, Vice Minister of Finance of Fiscal Policies, Ambassador Ayman AlKaffas, Deputy Minister of Finance for External Affairs; and Ms. Sara Eid, Deputy Head of Macro Fiscal Unit; Mr. Mohamed Yahia, World Bank Mena Representative; and Mr. Ahmed Ragab, Deputy Executive Manager of the Egyptian Center for Public Policy Studies (ECPPS). Mr. Al-Gharhy, announced that the Cabinet ratified the draft of the State's general budget for FY 2017/2018. The main objectives of the new budget were geared towards carrying out economic reforms, increasing growth rates and maintaining social security programs. However, given the government's plan to achieve primary surplus (before deducting debt interests) as a means to curb the soaring public debt rates, these targets should put additional pressure on both the preparation and the implementation of the budget, he pointed out. The government's financial policies aimed to boost economic growth rates and to achieve higher employment rates through adopting a package of measures to thrust investment and industrial activities. Therefore, in light of the positive economic indicators revealed recently, the government sought to expand the private sector's participation so as to account for 55% against 45% of the public sector in the new FY's total expected investments of 646 billion EGP, Mr. Al-Gharhy noted.   He also added that the government was studying a number of measures to mitigate impacts of economic reforms, emphasizing that these measures, such asapplying tax discounts for low income citizens, would be disclosed soon. Thanks to heavyweight national projects carried out by the government over the recent period, economic growth rates jumped to more than 4% in 2015 and 2016 against an average of 2.5% over 2010 up to 2015, he stressed. Commenting on the custom dollar exchange rate, the Minister said that he would issue a decision next Sunday determining its exchange rate and period of effectiveness. In the new FY to come, the government would resort anew to the international markets for raising funds, the Minister added. However, the size of international bonds to be issued and the offering date were still pending and conditioned with the achieved progress in the State's fiscal policies.  Main progress axes relied on increasing revenues, especially tax proceeds by expanding tax base, combating tax evasion, upgrading tax administration, continuing custom reform plans and integrating the non-official sector within the official economy, said Mr. Al-Gharhy. Attempting to demonstrate burdens shouldered by the State's Public Treasury, the Minister quoted a number of figures from the new FY State general budget. Namely, total salaries and wages would increase from 223 billion EGP to 240 billion, provisions of debt interests to 380 billion EGP, and subsidy provisions apart from petroleum and electricity to 200 billion EGP as compared to only 140 billion in the present FY budget. With respect to the expected tax revenues in the next FY, the minister pointed out that the estimated revenues were based on a deep analytical study to more than 20 revenue-generating sectors. Regarding the predicted international grants in the new FY, the Minister illustrated that the budget draft included grants worth only 1.1 billion EGP. Given the importance of the grants received by Egypt from the neighboring Arab countries in decreasing the 2014/15 general budget deficit in particular, the government should not turn a blind eye to the present challenges, he stressed. Asked about payables due to foreign partners at oil sector, the Minister said that both the government and the political leadership were paying due consideration to this issue. Paying debts of international oil companies should prompt them to increase their investments and embark on doing more oil and natural gas exploration works; hence, their fruitful results would render Egypt self-satisfied in this respect, he noted. On his part, Mr. Mohamed Yahia, World Bank Mena Representative, paid tribute to the continuing efforts of the Ministry of Finance in adopting the Citizen Budget and in disclosing the preliminary financial statement for the third consecutive year given all the great pressures and challenges encountered by the government. Such significant initiatives should enhance transparency & disclosure levels, support community participation in setting orientations of the fiscal policies, and render citizens more tolerant to economic challenges, more resilient to solution impacts and more persistent to contribute in reform plans, he added. Mr. Ahmed Ragab, ECPPS Deputy Executive Manager, praised participation of the senior officials at Ministry of Finance in the community dialogue regarding the new FY general budget and availing the opportunity for civil society organizations to take part in drafting general policies. He also called on officials at the research centers and other ministries to show more participation and cooperation among one another. Economics Professor Yomen Al-Hamqy, at Ain Shams University, highlighted that the government worked earnestly over the recent period to redistribute the stagnant public inventory and to generate more public revenues. She called on the government to explore other revenue resources, given that the majority of the general expenses items in the budget are inevitable such as salaries, interests of public debt and subsidies. In this respect, Minister of Finance demonstrated the government's endeavors to increase revenues through upgrading performance of Economic Authorities, Service Authorities along with companies of the Public Business Sector, issuing public bonds, and selling lands & public assets. However, he noted, given the non sustainability of the revenues generated from the two latter resources, increasing tax proceeds in GDP figures to account for real economic progress was also considered. On his part, Dr. Mohammed Maait, Vice Minister of Finance for Treasury Affairs, highlighted that good tidings of the State's economic reform policy and financial control plans had been reflected significantly on the financial performance of the present FY over July-February time interval. Total budget deficit decreased from 8% to 7% of GDP in comparison with the same period of the prior year.  Primary deficit (before deduction of public debt interests) declined to 43 billion EGP by 1.3% of GDP, as compared to a 2.6% primary deficit of 70 billion EGP over the same period of the prior FY budget. Such 50% drop was achieved thanks to the 22.6% surge in general revenues to amount up to 310.5 billion EGP, in addition to lowering public expenditure rates to reach only 14.2%, Dr. Maait was quoted as saying. A protocol was signed with the Central Bank of Egypt to organize public payment measures. By the end of the first quarter of FY 2018, Ministry of Finance would have completed issuance of all ATM salary cards for employees at the public sector: 1 million out of 5 million ATM cards were still to be issued, he said.   Over last July up to February, the government adopted a number of measures to increase expenditure directed to social dimension programs, including: increasing subsidy provisions for ration cards from 15 to 21 EGP per person, raising the local purchase price of wheat and affixing it with international prices, and moving up purchase prices of other agricultural products such as sugar cane. Moreover, as many as 700 thousand families were added to "Takaful and Karama" program with total beneficiaries of 1.7 million families. Funds worth 4 billion were paid monthly to the EGPC for supplying oil required for Electricity, Industry sectors and individuals. Allocations of treatment at the State's expense and pharmaceutical purchases were pushed to more than 3.049 billion EGP, and 789 billion EGP were allocated for health insurance system, stated Dr. Maait.  Compared with last FY, expenditure in health sector increased by 21% to amount up to  30.3 billion EGP, investments in education sector by 42% to 4.605 billion EGP and investments in higher education sector by 17% to 1.713 billion EGP, quoted Dr. Maait. On the level of the health insurance system, Dr. Maait reiterated that the Ministry of Finance integrated in the new FY budget plans of comprehensive insurance system. The new health insurance system shall have suitable financial solvency and sustainability so as to limit the State's treatment contribution to the most needed. He also added that 2.2 billion EGP to be deducted from total proceeds of the value added tax on cigarettes in favor of the health insurance system. On his part, Mr. Amr Elmonayer, Vice Minister of Finance for Tax Policies, emphasized that economic reforms had been reflected positively on tax revenues that jumped by 22.7% to 180.1 billion EGP and by 23% on tax revenues from non-sovereign entities. General non-tax revenues also soared by 20% to 83.7 billion EGP thanks to the 49% surge in the Suez Canal revenues, the increase in the New Urban Communities Authority revenues,  in addition to the State's Public Treasury proceeds of 6.4 billion EGP worth of fees against the 4G cell phone license.   Since the application of the Value Added Tax Law, a tangible effect was witnessed in tax proceeds and it would culminate in the new FY. Over the first 8 months of the present FY, tax proceeds of the Egyptian Tax Authority hiked by 25% to 201 billion EGP as compared to 160 billion in the same period of the prior FY. Real Estate Tax Authority's revenues jumped by 130% to garner more than 1.5 billion EGP against 800 million for the same period of the prior year, Mr. Elmonayer stated. He also stressed that the Ministry of Finance was keen to monitor that all taxpayers are committed to incur their tax liabilities. The Ministry was also keen to provide community dialogue for all its laws and resolutions. This was clearly manifested in the Value Added Tax Law that featured the participation of more than 600 officials. With respect to the Tax Dispute Settlement Law, he said that ad hoc settlement committees received more than 4700 applications, 1000 of which had been resolved with total tax income proceeds of 1.5 billion EGP and sales tax proceeds of 250 million EGP. Moreover, Mr. Elmonayer  disclosed  that a program was set to monitor all real estate transactions and results showed that one million transactions were executed over the last two months.  Tax administration worked on updating economic activity databases to figure out non-official practices. A number of measures were being investigated to transfer monetary transactions to banking transactions and to encourage issuance of invoices, he pointed out.   On his part, Mr. Ahmed Kouchouk, Vice Minister of Finance of Fiscal Policies, said that the State's general budget aimed to achieve a primary surplus (before deduction of debt interests) by 11 billion EGP. This objective should bring down both total deficit and public debt levels. Suez Canal recorded revenues worth 66 billion EGP, accounting for 70% of expected revenues in the new FY, public banks achieved surplus by 8 billion EGP, Economic Authorities by 5 billion EGP, Private Funds and Accounts by 24 billion and the government bond program by 6 billion EGP, he noted. The new FY general budget draft relied on definite parameters based on forecasts of international institutions as WTO and in light of the improvements witnessed in economic activities, oil and industry sectors. These parameters include achieving economic growth rates by 4.6% against the present rate of 4%,  a dollar exchange rate of 16 EGP,  an inflation rate of 15%, a 18% interest rate on treasury bonds and notes,  and a crude oil price of US 55 per barrel, highlighted Mr. Kouchouk.   He reinforced that as means to achieve objectives of the general budget draft, neither any exceptional measures nor non approved pending measures were provided therein, emphasizing the government's commitment to all the constitutional entitlements. Namely, 102 billion EGP were allocated to pre-university education, 65 billion EGP to higher education, 103 billion EGP to health sector and 31 billion EGP to scientific research, he quoted. He added that the Ministry of Finance was following up the performance of the general budget on a monthly basis in order to take an immediate action if any sector failed to achieve its required targets as well as to solve any subsequent problems before the end of the fiscal year.