Addressing Parliament, Garhy speaks on subsidies, taxes, deficit

CAIRO – 8 May 2018: The government is supporting the social safety net and is pressing ahead with measures aiming at protecting the poorest segments, Finance Minister Amr el-Garhy said on Tuesday.

Some 69 million citizens are benefiting from the food subsidy cards (ration cards), 76 million are benefiting from the bread subsidy system, while 12 million are benefiting from the cash transfer programs Takaful and Karama, Garhy said.

Addressing a general session at the House of Representatives to discuss the final account of the state budget for fiscal year 2016/17, Garhy said that pensions will reach some LE 200 billion next year.

He confirmed that subsidies are well targeted, though he referred to some violations in the Takaful and Karama programs, saying that some people have benefited from them, though they were not entitled to these programs.

He said that these cases are currently being dealt with to ensure that the programs reach those who deserve.

On the budget deficit, Garhy said that the deficit is declining by the year and that it dropped from 12.5 percent in 2016/17 to 10 percent in 2017/18, and will further drop to eight percent the coming fiscal year.

Concerning taxes, Garhy said the state is heading towards developing the tax collection system, saying that that the informal economy is sought to be integrated into the new system.

He said that the state will integrate owners of small businesses into the new system in a way that conforms to their incomes, stressing on the need to distinguish between the owners of the small businesses and the tax evaders.

Garhy denied what some Mps said about the increase in tax revenues, ascribing it to collecting arrears. He said that tax revenues reached LE 350 billion in 2016/17 and recorded LE 620 billion in the current fiscal year, targeting to increase this figure to LE 720 billion next year.

He said that these figures are the result of the efforts of the Tax Authority and not only the result of arrears.

The Finance Minister also spoke about growth, saying that Egypt is seeing “real” growth and that the government seeks to develop the growth rate through promoting economic systems that are not based on consumption.

Concerning loans, Garhy stated that obtaining loans comes only after good consideration of mechanisms of debt payments, pointing out that such loans are aimed at diversifying sources of income