The Future of Public Finances in Egypt

it takes each person an average of nine hours and 3.5 visits to a government office to complete a transaction like getting a building permit or a school transfer. 1 Bureaucratic inertia and resistance to change have been especially prevalent in revenue collection agencies, where income is hidden by those who manipulate the system for personal gain and others who use their authority to misreport tax liabilities and extract payment in the process, at the expense of the country's treasury. Yet, in the late 1990s, tax and customs reform had become a pressing necessity for Egypt to put its finances on sound fiscal footing. After a series of economic and political shocks caused the growth momentum to slow, the government reacted by pursuing expansionary fiscal policies, which further undermined financial stability.

For many decades, the Egyptian budget has suffered from chronic deficit. On the one hand, expenditures were growing at very high rates. On the other hand, growth of revenues was sluggish and did not reflect new sources of wealth or income in the economy. Government policy after the January 2011 Revolution faces many challenges. The popular uprising demanded social justice and better living standards. The fiscal implications of these demands are daunting. An expansion of public works, creation of employment opportunities, an increase in minimum wages and more progressive taxation are all called for. Also, there were persistent demands for a more equitable distribution of incomes and of tax burdens. This study focuses on two branches in the Egyptian government: the allocation and the distribution branches.

1984

First printing April 1984 All rights reserved Manufactured in the United States of America This is a working document published informally by the World Bank. To present the results of research with the least possible delay, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. The publication is supplied at a token charge to defray part of the cost of manufacture and distribution. The views and interpretations in this document are those of the author(s) and should not be attributed to the World Bank, to its affiliated organizations, or to any individual acting on their behalf. Any maps used have been prepared solely for the convenience of the readers; the denominations used and the boundaries shown do not imply, on the part of the World Bank and its affiliates, any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries.

The Journal of Developing Areas, 2015

This paper aims at finding and analyzing the key determinants of Egypt's fiscal deficits for the period of 1985-2013. It hypothesizes that the political and institutional factors are more important than macroeconomic variables to explain the fiscal deficits of the country in question. In carrying out the research, the paper employs ARDL technique. Findings of the study include that the growth in interest payments, public wages, and subsidy bills are the key sources of fiscal deficits in Egypt. They separately outweigh most of the gains with tax revenues. The reason for this kind of results is found to be largely due to adverse political and institutional factors prevailing in the country. In order to estimate the individual influences of the factors, we use Variance Decomposition Method. Policy implications of the research suggest that to control the future risks of fiscal deficits in Egypt, it is necessary to restrict the growth of subsidy bill and interest payments. However, more efforts are needed to reform the entire tax revenue system and its collection procedures. In addition, policy makers should adopt massive and appropriate political and institutional reform measures.

2002

Working Papers, 2010

We construct a dynamic general equilibrium model to analyze the fiscal situation of Egypt. We model Egypt as a small open economy that takes real interest rates and world prices of fuel as given. Since a large component of the government budget consists of pensions payments, we use an overlapping generations structure. The model contains descriptions of the public and private sector, as well as descriptions of the production sectors for a public good such as infrastructure, energy, and a final aggregate consumption good. The model pays special attention to the energy sector. We then calibrate the model to data from Egypt. The following policy reforms are considered: (i) reductions in pensions to public sector workers, (ii) reductions in pensions to private sector workers, (iii) reductions in the public sector pay premiums, (iv) decreases of the energy subsidies, and (v) a decrease of the public sector workforce. In each case we reduce the "expenditure" by 15 percent. For each of the reforms we adjust consumption taxes, labor taxes, "capital taxes", or public investments in infrastructure to satisfy the government budget constraint. We calculate the new steady states, the transition paths to the new steady states, and the size of the welfare gains or losses for all reforms. We find that due to the modest nature of the reforms, the effect of the policy reforms on GDP and consumption are modest. Often these gains are in the neighborhood of 1 percent. We find that welfare gains or losses can be sizeable and that the largest gains from the reforms are attained when the freed up resources are used for infrastructure investments or for lowering the tax on company profits.

2021

The purpose of this study is to examine how do corporate and income taxes impact economic development in Egypt. This study uses the analytical quantitative method, and the approach of this study is based on using annual time series data for the period 1980 to 2018 to estimate two models by using Autoregressive distributed lag (ARDL) model. First estimation is between direct taxes (corporate and income taxes) and Growth domestic product (GDP) growth as dependent variable, and the second one by using human development index (HDI) instead of GDP growth. The second objective is to investigate the difference, if any, with the result obtained by using HDI and GDP in estimating the impact of the corporate and income taxes on the economic development of Egypt. Findings show a positively and significantly relationship between direct tax (Income and Corporate taxes) and economic growth in Egypt, and negative relationship between direct tax (Income and Corporate taxes) and economic development...

2002

The Journal of Legislative Studies, 2016

Purpose-This paper aims to show the aligned development that took place in public administration and public financial management toward serving public values. By analyzing the mode of institutions' interaction, the paper attempts to pinpoint the changing trends in budget institutions in Egypt, probing the extent to which they can be read from an administrative perspective and the possibility of enhancing budgetary outcomes under the existing administrative arrangements. Design/methodology/approach-An analytical framework for public management administrative and budgetary institutions' alignment is presented. A ladder analysis is developed to highlight the consistency of rationale between the two sets of institutions. The alignment is demonstrated at three consecutive levels: control and discipline, efficiency and effectiveness and openness and communication. Findings-The international experience reveals that the alignment of administrative and budgetary institutions is both theoretically traceable and practically applicable in the case of developed economies. Whereas, in the case of Egypt, both sets of institutions have been exposed to best practices; yet, they are not seen as complementary and enforcing each other. The internalization of the benefits of reforms in the two tracks into an integrated public management context in the case of Egypt is not reached. Practical implications-Egypt needs to ensure the alignment of both dimensions to maximize the benefits of reform. Originality/value-The ladder approach sorts the developments in both administrative and budgetary institutions into three levels to help assessing the maturity and conformity in countries' public management systems.

The Journal of Philosophy, 2024

We find a simple counterfactual acceptable, it is argued, to the extent that (i) our probability of the consequent under the thought experiment of counterfactually supposing the antecedent is high, (ii) provided the latter is on-topic with respect to the former. Counterfactual supposition is represented by Lewisian imaging. Topicality, by an algebra of subject matters. A topic-sensitive probabilistic logic is then provided, to reason about the acceptability of simple counterfactuals.