Armed Forces Supreme Council Chief, Field Marshal Mohamed Hussein Tantawi, has approved the general budget of the fiscal year 2011/2012 after it gained the approval of the Cabinet.

The new budget det...

Armed Forces Supreme Council Chief, Field Marshal Mohamed Hussein Tantawi, has approved the general budget of the fiscal year 2011/2012 after it gained the approval of the Cabinet. The new budget details total expenditure of LE 491 billion at a rise of 15%, compared to the previous budget. Expenditure on the social dimension accounts for 54% of the total as the government emphasised its complete commitment to the needs of the low-income brackets of the citizens, in the face of the international fluctuating food prices. Education sector total allocations amounted to LE 52 billion, a rise of 20%, compared to the relevant clause in the modified previous budget. Health sector allocations displayed a hike of 17% at LE 23.8 billion. Housing and social utilities rose by 39% to LE 16.7 billion. The most significant aspect of the new budget of 2011/2012 is its inclusion of several important social security features aiming at protecting government employees and pensioers. Total wage allocations hit a high of LE 118 billion at a rise of 22% compared to the expected figures of the previous budget. These allocations include the cost of the special raise of 15%, enjoyed by the government administration employees, which totalled a sum of around three billion Egyptian pounds. Moreover, the new budget includes the cost of financing the first phase of government system wage reformation program where raising the minimum variable wage has been approved from 75% to 200% in an unprecedented move. This makes the total salary of the sixth degree employee around LE 684 starting July 2011—a measure that benefits around two million employees at a total cost of LE 9 billion annually. The measure aims at bridging the wide gaps in the salaries of employees occupying the same ranking posts in the different government agencies. Pensioners got the greater portion of the increases in spending on the social aspects in this budget. This is represented in raising pensions last April by 15% of the total, not the basic, pensions. The measure is an unprecedented move within the government’s efforts to help pensioners face difficulties to improve standards of living. The general budget will bear the total cost which is LE 6.5 billion, and will benefit around eight million pensioners and beneficiaries. The budget includes as well allocations to cover the difference resulting from the 2008 raise in pensions to 30% instead of 20% with no maximum limit, cancelling the maximum limit which was set in 2008 at LE 100. This is a gesture from the government to maintain equality among pensioners and their beneficiaries and to enhance their living standards. The cost of financing the raise is about LE 2.8 billion annually and is to the benefit of about 7.5 million of pensioners and beneficiaries. LE 1.2 billion has been allocated to finance the treasury’s commitment to bear the cost of the annual increases in pensions which started in July 2010 which target increasing pensions that were previously set at LE 40, 50, 60, etc. (now raised to LE 176, 185, 195, etc.). These increases go to the benefit of around 3.5 million persons in addition to new pensioners who qualified for pensions starting July 2010. This is to be added to LE 17 billion allocated by state treasury to social security funds, paid as interests of the state’s debt to the social security funds. The government previously proposed a budget bill with a deficit of around LE 170 billion at 11% of GDP. However, the societal dialogue that erupted around the bill displayed a trend to decrease the deficit and to save the coming generations from the burdens of huge debts—a trend supported by the Armed Forces Supreme Council considering the current economic circumstances. The government, subsequently, modified its bill to reduce the deficit by cutting down public spending and resetting priorities. The government, however, maintained the balance between necessary cuts and commitments to the social aspect of implementing necessary phases of accomplishing social justice and spending more on investment which supports growth. Cutting expected deficit by around LE 36 billion to LE 134 billion to render it 8.6% of GDP still preserves the expansive feature of the financial policy which includes programs to stimulate economic activities and others to reinforce social justice, compared to the budget bill prepared before the 25 Jan. Revolution which targeted a deficit of 7% of GDP. The Cabinet emphasised its keen efforts to make all government agencies work strictly within the limits of allocated expenditures, and to depend on their own sources of financing through special funds and accounts of each agency to cover urgent cases of extra spending.