Ghali: the initiative is a new mechanism aiming at engaging the citizens in determining the priorities of public spending in their governorates and areas of residence

Annual summaries of state rev...

  Ghali: the initiative is a new mechanism aiming at engaging the citizens in determining the priorities of public spending in their governorates and areas of residence Annual summaries of state revenues and expenditures on the national level to be published, together with reviews of the most important financial decisions Detailed statements of financial allocations of public services in every governorate and town Menoufiya and Assiut are the first two governorates to prepare special budgets detailing revenues & expenditures and allocations of public services The first “Citizen Budget” has been issued in Egypt in an initiative of the Ministry of Finance aiming at increasing societal participation in determining the order of priorities of public spending on the levels of both the state and each governorate and town, according to Egyptian Finance Minister, Dr. Youssef Boutros Ghali. Dr. Ghali considered the Citizen Budget as one of the mechanisms established to reinforce financial decentralization since it would allow each citizen to know the sums allocated to the different aspects of public services such as education, health, culture, youth & sports, etc. in the citizen’s governorate or home town. Consequently, this will allow the citizen to suggest the projects deemed of higher priority in the area of residence of the citizen—a sort of societal participation required in the decision making process which eventually serves the society and its priorities. The Finance Minister added the new initiative would allow publishing a summary of the structure of revenues and expenditures on the national level in addition to a review of the most important decisions and issues related to the Egyptian financial policy. The purpose is to raise citizens’ awareness of the components of the budget of their country and the developments that take place on a yearly basis. The citizen budget will be issued annually following the People’s Assembly’s approval of the State public budget. It will take the form of a brief statement which will initially include public expenditures and revenues on the state level. This is to be followed by detailed statements of both revenues and expenditures on the levels of governorates and their componential towns. The minister explained that the citizen budget is a miniature form of the public budget; thus, it enables the citizen to identify the sums allocated to the different sectors and services, in addition to the sources of public revenues, volume of total deficit, development of governmental debt, its indicators, and manner of servicing this debt. The best interest of the citizen and the priorities of development in Egypt are the factors that determine the features of the budget. Public spending aims, eventually, at raising the standard of living and securing the basic services for the people.  The State public budget is developed in such a way that puts in consideration the best interest of the future generations; thus, the decisions taken today build on that and are carefully designed to establish equal opportunities among the different generations in both benefits and burdens. The citizen, at the end, is the real owner of the budget, so the citizen has to be fully aware of its details and must play a role in determining its orientations, according to Dr. Ghali. The Finance Minister also asserted that issuing the citizen budget was a part of a series of executive measures taken by the Ministry of Finance in the framework of a policy of transparency, data disclosure and controlling the financial performance of the State public budget. The first such measure was to re-order the budget sections in line with international standards and to automate the effort of preparing and executing the public budget. This will allow a systematic disclosure of information, periodically and at short intervals. It will also automate governmental payments electronically, present the details of the public budget according to both economic and functional classifications, and publish on the actual performance of the budget all through the fiscal year on a monthly basis in the financial report. The report is issued monthly by the Ministry of Finance, and will be available on the ministry’s website. Some of the most important constitutional amendments introduced at this stage, Dr Ghali says, make it mandatory for the Ministry to prepare and present the budget proposals and the final financial statements of the State public budget to the People’s Assembly according to early set deadlines. Article 115 was amended to stipulate that the projected budget be presented to the Assembly three months at least before the new fiscal year, providing for sufficient time for discussions before finally approving and passing the budget. Previously, the budget was presented shortly before the new fiscal year, not allowing for sufficient time for discussion of budget details. Article 118 was amended as well. It now stipulates that the final financial statement of the State budget be presented to the People’s Assembly within a maximum of six months following the end of the fiscal year. Previously, the final statement was presented around a year later, which had negative effects on the controlling role of the Assembly in reviewing the final performance of the budget. It had also adversely affected the efficiency and accuracy of preparing the budget of the following year and taking the proper economic decisions in the right time. The minister explained that these amendments would ameliorate the controlling role of both the parliament and the society over the State public budget and all the relevant governmental bodies. In September 2005, the Ministry of Finance had the State public budget law 53 of 1973 amended.  The new law re-orders the sections of the budget in accordance with the government auditing system developed by the International Monetary Fund in 2001. Updating the sections of the budget has facilitated reading and following up the budget performance after it was too difficult and complicated for the layman and even for many specialists. Re-ordering the budget sections, also adopted by most countries around the world, has led to a smoother tracking of the development of the performance and comparison to that of other countries according to the international standards. This has also made it possible to analyze and ameliorate the financial policy performance in Egypt. Under the adopted financial controls, the new law made it obligatory to set a ceiling for the public expenditure reserves (not to exceed 5% of the total uses of the State public budget without the interest). This ensures classifying the components of expenditures in a clear, explicit way, setting strictly defined areas of spending while the reserve should be confined only to unexpected and emergency cases. Financial reforms also included the passing of the unified budget account in 2006 according to which the accounts of the governmental agencies were transferred from the commercial banks to a unified account in the Central Bank. This complies with the principle of putting the comprehensive budget, including the accounts of the governmental agencies, under the supervision and follow up of the Ministry of Finance as a main step towards establishing transparency and managing and controlling the state expenditure. Currently, the Ministry of Finance is implementing a program of automating all the processes of collected revenues and managing expenditures to uphold the principle of disclosure, controlling expenditure and reducing the cost of monetary management. In the first step, salary and pension payments were automated issuing around 688,000 ATM cards back then, while the total electronic cards for pension payments has now exceeded 1.5 millions.  Dr. Ghali mentioned that all these policies and measures aim at improving the standard of preparing and implementing the public budget, reinforcing societal and official control over the performance of the State public budget. This leads to more financial control and discipline and better management of the state resources towards the society’s basic requirements according to the priorities and needs of the citizens. On the other hand, Finance Minister Assistant Hani Qadri stated that the Citizen Budget statement is a brief simplified guide which necessarily addresses the ordinary citizen about the public budget of the state for the fiscal year 2010/2011 which was approved by the People’s Assembly. This statement identifies, among other things, the goals of the financial policy in Egypt and the new elements introduced by the budget this year on the national level as well as the governorates and towns, for their residents, together with an explanation of the principal features of the current year’s budget, including the sources of revenues, distribution of expenditures, clarifying the most important social protection programs, subsidizing the limited income brackets, the basic results of the public budget, the impact on economic performance and its future aspiration, and governorate projects. He added that the citizen budget is a device used in different countries aiming at the financial education of the people. It also helps in clarifying the confusion concerning the manner of allocating funds and spending resources in the public budget by disclosing the real figures of the data of public spending and the public resources with their allocations. As for the citizen budgets for each governorate, the initiative was taken by the two governorates of Menoufiya and Assiut in collaboration with the Ministry of Finance to prepare the first such budgets locally; the experience will be followed by the other governorates in the near future. This will include an explanation of the revenues and expenditures of each governorate, the allocated funds for services on the level of towns within the governorate and the volume of investments allocated for each entity. The Finance Minister Assistant also added that this would enable the citizen, especially on the local level, to play a controlling and follow-up role concerning the performance of the services provided to the citizen in the State public budget. The system helps the citizens to identify the volume of local revenues collected from the governorate and the financial deficit of the governorate covered by the state budget. In addition, this renders the local officials even more accountable since citizens will be able to question how efficient and efficacious spending is, as managed by the governorate and its towns and villages according to the funds allocated by the State budget for spending on different services. Coordination among the governorates, he added, is planned to adopt the citizen budget principle in all the governorates starting with the 2011/2012 budget which will be published on the Ministry’s website following its approval by the People’s Assembly as a guide for understanding the public budget of the target fiscal year. ( Source: Ministry of Finance)