A financial program rearranging spending priorities and supporting social protection
Performance improvement of the state budget financing sectors continues for the tenth month respectively
44 billion EGP, an increase in total tax revenues raising total public revenues by a ratio of 2%
Customs income rises by a ratio of 31%, sales taxes by a ratio of 35%, and income taxes 14, 7 %
30 billion EGP, contributions in insurance and pension funds, and 5, 5 billion EGP for security pension
Escalating supply commodities subsidy to 26 billion EGP and doubling electricity to record 22, 4 billion EGP
9 billion EGP increase in public investment spending, and 13, 5 % growth of wages and employees compensation
44, 5% growth in the Central Bank of Egypt’s profits, transferred to the State Budget, 73 % for economic authorities, and 70, 4 % for petroleum royalty
Minister of Finance, Mr. Hany Kadry Dimian, confirmed that the government, as of the beginning of current fiscal year, prepared a package of financial and economic policies targeting push of economic activity, support social protection, achieve financial stability, and decrease State Budget deficit which will generally control excessive increase in prices.
He said that Ministry of Finance applied a financial program aims to rearrange public spending priorities through the reform of energy subsidy rationalization system, expand tax base, raise efficiency of collection, and manage public debt more effectively, in addition to many other reforms in public financial management.
He clarified that those spending rationalization policies based on procedures to assure that expenditures fulfil the purposes of which, direct achieved economies to finance social-dimensional programs, and increase spending on education and health to fulfill the constitutional entitlements.
Minister of Finance referred that the financial and structural reforms implemented by the government this year had clear positive effect on many economic indicators, mainly: increase of GDP growth rate by a ratio of 4, 3% from October to December 2014 against only 1, 4 % during the same period of last fiscal year. Moreover, the unemployment rate decreased in the period from April to June 2014 achieving 12, 9% against 13, 4% during the same period of last fiscal year.
The Minister added that Standard & Poors For Credit Ratings changed its future outlook of Egyptian economy from stable to positive in last May, this is the fourth positive procedure to evaluate the Egyptian economy made by global credit ratings institutions within last seven months: Moodey’s For Credit Ratings positively changed its future outlook from negative to stable in October 2014, thereby raise its rate for the Egyptian economy from Caa1 to B3 in last April. Consequently, Fitch for credit ratings raised its rating from B- to B last December. Due to the positive decisions of International Ratings Institutions imply that they support Egypt’s economic political trends, confirming that Egypt walks in the right way, and referring to the Egyptian economic recovery, and restore confidence in the Egyptian economy and its way of management. In addition to the positive effect on decreasing financing costs, attracts further investments.
A report of the Ministry of Finance revealed that performance improvement of the state budget financing sectors continues for the tenth month respectively from the beginning of current fiscal year, this due to the increase of tax revenues by 44 billion EGP to register 239 billion EGP at the end of last April, achieving a growth ratio of 22, 6% for the same period in last fiscal year, income taxes revenues increased by a ratio of 14, 7% to record EGP 103, 7% , goods and commodities by a ratio of 35, 1% to record 97, 5 billion EGP, this principally is attributed to the improvement of tourism sector. In addition to the increase of customs taxes revenues by a ratio of 31, 6% to collect 17, 9 billion EGP due to continuity of anti-evasion measures, tighten control measures on customs ports, outcomes of taxes on property increased by a ratio of 9, 5% to record 17, 3 billion EGP.
The report also indicated that the effect of those increases on total public revenues represented in its increase by a ratio of 2% only or 6, 2 billion EGP roughly because of exceptional grants and aids presented to Egypt last fiscal year. If it neutralized, tax increase shall relatively raise total public revenues which recorded 321 billion EGP against 541,7 billion EGP the total od public expenditures, which lead to increase overall State budget deficit by 230, 9 billion EGP during the period from July – April 2014/2015 represents 9, 9 % of GDP against a ratio of 8, 2% from July – April 2013/2014.
The report clarified that the continuity of non-tax revenues which decreased by a ratio of 31, 5% to record 82 billion EGP during the period from July to April in the current fiscal year as a result of decrease of grants of friendly states.
The report attributed the improvement of tax revenues during the first ten months of current fiscal year synchronized with the season of presenting tax returns and paying outcomes, the indicators refer to remarkable improvement in tax returns in the number of tax returns presented with the growth of tax revenues, in addition to the tangible increase in taxpayers numbers in comparison with the previous years, expanding of voluntarily obligation by taxpayers to pay the public treasury dues before the end of current tax season, and take the advantage of tax reforms applied in the beginning of the current fiscal year, which reflected on the increase of sovereign authorities profits such as CBE as a result of paying tax arrears of previous years by the bank, also Petroleum Authority which made settlements with about the subsidy value, and due taxes on petroleum products.
The report revealed that sales taxes increased by a ratio of 26, 9% to achieve 43, 4 billion EGP, cigarettes taxes by a ratio of 32, 1% to record 21 billion EGP, services by a ratio of 305 to achieve 9, 5 billion EGP in light of improvement of tourism sector, especially presented services in hotels, tourist restaurant, improvement of international and domestic connections services, and stamp tax also increased by a ratio of 9, 5% to achieve 6 billion EGP.
The report clarified that the reasons of non-tax revenues decrease is due to the remarkable decrease of grants to record 7, 9 billion EGP during the first ten months in the current fiscal year against 51, 4 billion EGP during the same period in the previous fiscal year, alongside with decrease of transfers from the special accounts and funds to the state budget by 2, 3billion EGP (16, 9% the ratio of decrease) to record 11, 5 billion EGP.
On the other side the report also revealed increase of shares dividends transferred from the CBE by 4, 1 billion EGP to record 13, 4 billion EGP increased by 44, 5%, Economic authorities by 0, 9% billion EGP to record 2 billion EGP, a growth rate of 73%, in addition to petroleum royalty by a ratio of 70, 4 % to also record 2 billion EGP, and the increase of miscellaneous revenues by 54, 7% to record 10, 8 billion EGP.
The report showed the increase of spending on wages and employees compensation by a ratio of 13, 5% to reach 157, 8 billion EGP, purchase of goods and services by a ratio of 3, 2% billion EGP (a growth rate of 18%) to achieve 21, 2 billion EGP, and on payments of public debt interests by 14, 2% billion EGP (11, 2%) to reach 140, 7 billion EGP.
As for subsidy, grants, and social benefits, the report notes that it increased by 17 billion EGP, a growth rate of 13, 3% to achieve 145 billion EGP, due to increase spending on subsidy to 102, 8 billion EGP, through spending increase subsidy of supply commodities by 5, 6 billion EGP by 27, 2% to reach 26 billion EGP with doubling electricity subsidy to record 22, 4 billion EGP approximately. Moreover, increase of spending on social benefits by 5, 2 Billion EGP, a ratio of 16, 6 % to achieve 36, 7 Billion EGP given the increase of public treasury contributions in pension funds by 3, 7 Billion EGP, a ratio of 13, 7 % to record 30, 4 Billion EGP, and on social security pension by 1, 4 Billion EGP by a ratio of 35% to reach 5, 5 Billion EGP. Regarding public investments, the report revealed that they increased by 9 Billion EGP, a growth ratio of 29, 7% to record 39, 3 Billion EGP by the end of Last April.