Minister of Finance Dr. Ghali has announced that the government will continue to support limited income citizens and will improve service facilities, in addition to research the most appropriate methods for the exploitation of resources.

Ghali explained that government revenues are compromised by general expenses which consume 9.4% of the GDP leading  to a budget deficit of  59.2 billion pounds.

The Finance Minister defined a three-way strategy to slow down public spending to 4% of the GDP as opposed to the current  8%  over the next five years.

The Minister explained that the first priority is cutting down on public spending at the rate of 1% per annum.   Dr. Ghali said that this will entail containing government wages and salaries or 5.5 million government employees some of whom will be  re-channeled into the  private sector and social fund programs, in addition to reviewing subsidies on oil products and food supplies. He said that rationing government spending will evolve through a number of means including encouraging leave without pay and linking bonuses to performance levels.

The Minister went on to explain a shift from the sales tax into a value added tax in line with globally acknowledged systems saying that the move is an attempt to pump sustained treasury revenues through a tax system that takes into account the relative ratio of  government revenue to the GDP.  The idea is that sales tax  must be related to  the rate of consumption. 

The government is also studying measures to activate the departments of cash flow and public management debt with the introduction of a single treasury account.

A unified treasury account is also being studied through activating the departments of   general debt and the financial flows

Dr. Ghali said that the People’s Assembly is reviewing a new project for the social insurance fund budgets and will include  the payment  of interest due worth  15.7 billion pounds from the treasury  to the social insurance funds.  The interest amount  will be paid up in cash in the fiscal year 2006/2007 and will lead to a financial surplus of 8 billion pounds to be invested in investment pools. Ghali also noted that the new pension law hopes to achieve a more just distribution of pensions as figures reveal that 27% of retired individuals receive 66% of the total pension funds.

(source :Al ahram)