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Sunday, 19 June 2016

House Planning Committee accepts compromise on health and education spending amid threats to tank the budget

Over in Parliament, the House Planning and Budget Committee approved a plan that would see total spending on health and education in FY2016-17 come in at the equivalent of 10% of 2015-16 GDP. The constitution mandates that total state spending on the two sectors be the equivalent of at least 10% of GDP. MPs had been pushing for FY2016-17 spending to come in at 10% of that year’s GDP. Government officials had raised concerns about (a) the state’s ability to afford spending hikes and (b), rather sensibly, asked whether the two sectors had the capacity to absorb new spending. The notion that next year’s spending be equivalent to 10% of this fiscal year’s GDP is a compromise, Al Mal reports.

The House Health Committee is apparently leaning towards signing off on the plan, said committee chairman Magdy Morshid. The compromise to count next year’s health and education spending as a percentage of this year’s GDP of EGP 2.8 tn (as opposed to next year’s projected GDP of EGP 3.2 tn) was proposed by the Finance Ministry last week, amid threats by MPs (some from within the Planning Committee) to reject the budget altogether. The Egyptian Medical Syndicate has also threatened to bring the matter up with the Egyptian Council of State (Maglis El Dowla) if health spending was not brought in line with the strict constitutional mandate, Al Borsa reports. The House will deliberate on the FY2016-17 budget on 26 June.

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