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House passes 2022/23 state budget amid critique of earmarks for debt servicing, lavish allowances, megaprojects

After weeks of tense debates, the pro-state parliamentary majority headed by the Nation’s Future Party led the final approval of the general budget for Fiscal Year 2022/23 in the House on Tuesday, despite significant criticism for its steep earmarks for debt servicing, megaprojects and judicial bodies.

Immediately after approving the budget — which features a deficit of LE558 billion, with planned expenditure topping LE2 trillion and expected revenues estimated at LE1.5 trillion —Tuesday’s session also saw the approval of a LE7-billion loan from the Arab Monetary Fund, meant to “help Egypt overcome the economic repercussions of the pandemic.”

“We are facing a terrifying catastrophe,” House Economic Affairs Committee member MP Ahmed Farghaly said, voicing opposition to the loan. In just two months, Farghaly added, the House has approved loans worth LE80 billion, “which represents 8.5 percent of the state’s expected revenues next year.”

“It looks like the government has no plans to offer but more borrowing. We’re basically borrowing just to fill the budget deficit. If the government is bankrupt of ideas, we must then reject these loans and hold the prime minister accountable for all these unacceptable policies,” Farghaly added, as he filed a request for briefing by the prime minister.

The staggering debt Egypt’s budget must accommodate has already fueled a few heated sessions this week. On Sunday, a number of MPs leaned into criticism of the inflated allocations for debt servicing in the budget, as well as the generous allocations for National Elections Authority judges.

The government’s financial statement reveals a massive and historic deficit, Mohamed Badrawy, a member of the House Planning and Budget Committee, explained to Mada Masr. “The volume of debt is higher than revenues. Our revenues amounted to LE1.5 trillion, while our borrowing alone reached the same figure.”

“The Egyptian people are all now working at the behest of lenders,” independent MP Diaa Eddin Dawoud shouted at the top of his lungs in Sunday’s session while reading out figures on Egypt’s scheduled debt repayment.

Dawoud read out quotes from the general budget, which refers to bonus allocations to judges on the board of the National Elections Authority: “LE30,000 once every three months for ordinary effort. LE36,000 for exceptional efforts in Ramadan. LE36,000 for exceptional effort during Eid. LE20,000 in June for summer holiday. LE72,000 for exceptional effort during July and August.”

“We are supposed to be reviewing an austerity budget! But the spending allocated for some ‘independent bodies’ such as the National Elections Authority is horrifying. How can this be the spending of a country preaching tight austerity?”

“I hereby declare my rejection of this budget,” Dawoud said, “as it is the byproduct of the miserable policies of a government that has failed to address structural problems.”

This fiery criticism toward bonus allocations for state and judicial bodies inspired the House to break with historic precedent in the final budget-voting session.

On Tuesday, while reading out budget allocations for state bodies, House Speaker Hanafy al-Gebaly refrained from announcing the total budget allocated for the House, offering only financial allocations for three items: “LE1.014 billion as wages and compensation for House members and employees, LE497 million for the purchase of items and services and LE60 million for non-financial assets.” Eventually, in an unprecedented move, the speaker requested a vote on the House budget without disclosing its total figure.

The state’s megaprojects also came in for censure.

“We must end the failure of the state’s vision for economic reform,” MP Ahmed al-Sharkawy said as he opposed the budget, honing in on government expenditure priorities. “How is it at all reasonable to allocate LE50 billion to build a monorail, while the total budget for the education system is only LE19 billion?”

This year’s budget comes amid difficult circumstances, Badrawy noted. The deficit is inevitable because this year we bagan repaying previous debt installments. “We will pay LE1 trillion for previous installments, and, every year, this number will increase automatically.”

The total debt has exceeded LE8 trillion, Badrawy said, over LE5 trillion of which is internal debt, and $150 billion of which is external debt. “Whatever is happening now is irresponsible borrowing.”

Egypt is currently in the midst of a steep economic crisis, brought on by the impact that Russia’s invasion of Ukraine has had on the world economy. In recent days, the government has signaled that the economic situation may get worse by the end of the current year. To stem the effects, Egypt began talks with the International Monetary Fund for a new loan and has sought to court Gulf investment into key sectors of the economy, from banking and real estate to the health sector.

Until five years ago, Badrawy explained, debt servicing amounted to only a third of those figures, while the taxation of citizens brought in 77 percent of state revenue, with an increase of 5 percent over the previous years. “The citizen,” he said, “bears the real cost of continuous borrowing.”

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