The Egyptian government has turned to what it called the rationalization of public spending in the bodies that are included in the state's general budget and economic bodies, under the pretext of providing the requirements of the health and national security sectors.

Last week, Prime Minister Mostafa Madbouly issued a decision on rationalizing government expenditures in light of the emerging Corona virus pandemic, to be implemented for a period of 6 months starting from the start of the work on the budget for the fiscal year 2020-2021.

The aspects of rationalization, published in the country's official gazette, included several items, some of which are specific, such as stopping appointments and promotions except for leadership positions, and another with a loose meaning, such as freezing 50% of the listed allocations for social service.

Last May, statements came out from parliamentarians and government officials talking about a plan to reduce spending in the new budget, after which the Minister of Finance, Muhammad Maait, announced last June about the largest budget in the country's history for the year 2020-2021.

The new budget amounts to 2.2 trillion pounds, of which 1.7 trillion is for expenditures, an increase of 138.6 billion over the budget of last year, and the government's move to reduce spending appears unfamiliar to the official sectors, at a time when citizens have been suffering from austerity for years, specifically with the signing of the government agreement to obtain a loan from the International Monetary Fund. Worth 12 billion dollars.

Aspects of rationalization

According to the contents of the prime minister's decision, the aspects of rationalization included several items, including wages and workers' compensation, as it was decided not to make any appointments or promotions except for leadership positions, and to prevent any job adjustments or adjustments until next January.

Under the same clause, it was prohibited to spend on training grants, training bonuses and scholarships inside or outside, and to prevent spending on social service credits, other than monthly and seasonal social, sports and entertainment benefits for workers, as well as prohibiting increasing the allowance for meetings, or attending sessions and committees, while reducing the value of 50% Allowance for attending the session or one meeting.

The item for the purchase of goods and services included a prohibition of spending on the costs of training programs, expenditures for advertising, publicity, parties, receptions and public relations, and funds allocated for cultural relations abroad.

In addition to the prohibition of spending on participation in conferences at home and abroad, transportation allowances for travel abroad and transportation costs, it was also decided to freeze 50% - at least - of the financial appropriations listed for the parties entering the education, youth, cultural and religious affairs sectors, which are the sectors whose activities have been partially or totally suspended during Corona pandemic, and for the rest of the entities that did not stop their activities, the equivalent of 20% of their financial funds will be frozen.

In addition, the provision of support, grants and social benefits included freezing 50% of the list for social services, and prohibiting the disbursement of awards and medals, except with the approval of the Prime Minister.

As for the purchase of non-financial assets and investments, it included freezing 100% of the funds for the means of transportation and transportation, and freezing 50% of the credits for the item of research and studies.

The Egyptian government says that rationalizing expenditures contributes to meeting health and security requirements (Al-Jazeera)

Austerity and wasteful

It was only in October 2016 that the government made previous statements regarding rationalizing official spending, when local media reported the Cabinet's approval to cut spending by 10-20%.

The Council of Ministers did not clarify at the time the nature of the rationalization that was being implemented, and no government sector appeared after that to reduce its expenditures, at a time when the government embarked on implementing a full and long-term plan under the name of "economic reform" that relies mainly on depleting the citizen's pocket.

The economic reform plan is one of the conditions of the International Monetary Fund to agree to grant Cairo a loan of 12 billion dollars in installments. It depends on several measures, including increasing taxes, liberalizing the exchange rate of the pound and lifting energy subsidies.

In return for the austerity attempts and the economic suffering experienced by the citizen, the government is embarking on the implementation of projects with a huge financial cost with no evidence of their viability, such as the Suez Canal branch that was inaugurated in August 2015, with tremendous propaganda for the profits it will generate, which has not been achieved on the ground. Reality after 5 years of operation.

The government promoted that the profits of the new channel would reach 100 billion pounds, while official reports showed a decline in profits in the first two years of its operation, followed by a limited increase that was not comparable to what was promoted.

The revenues of the Suez Canal in 2015 decreased to $ 5.1 billion, then $ 5 billion in 2016, then increased again in 2018 to reach $ 5.5 billion, and with the new branch model, the presidential palaces built under President Abdel Fattah El-Sisi are in the same row as wasting state funds. .

Al-Sisi admitted in one of the sessions of the Youth Conference last September that he had begun building these palaces and that he had the intention to build more of them, including a palace in the Maamoura area in Alexandria that was renovated by about 250 million pounds, and in front of this recognition several statements of the country's president stand out. Egyptians demand austerity and reduce spending.

The Suez Canal branch project has not achieved the desired profits after 5 years of its operation (Al-Jazeera)

Austerity risks

In an article entitled "Public spending and the talk of austerity," Medhat Nafe, a professor of finance and investment at Cairo University, said that in the event of a decline in public revenues expected by about 124 billion pounds, due to the Corona crisis, and the decline is used as a justification for the austerity decision, this path must be proceeded cautiously.

He explained that the economic and social impact of this austerity measure should not lead to a further decline in public revenues, frustrate the investment decision, or increase the losses of the private enterprise, warning of the repercussions of austerity that may lead to the risks of unemployment, declining national income, and the spread of recession of varying degrees.

For his part, the economist Dr. Abdul Nabi Abdul-Muttalib said that some of the provisions for rationalizing spending are not new, and therefore the announcement of the austerity decision is not established, but rather reveals government measures that have taken place for years, and he indicated that the government stopped appointments years ago without an official announcement of that.

As for the projects that the system has worked to implement in light of the economic crisis and calls for rationalization of consumption, Abdul Nabi assured - in his speech to Al Jazeera Net - that the feasibility of the project is determined from the point of view of the decision maker.

He concluded his speech by stressing that increasing government spending on establishing factories, developing agriculture, and providing more job opportunities will contribute to reviving and developing the Egyptian economy.