Source: Economic Research Forum
Author(s): Mohamed Zaky
• Since the January 2011 popular revolution, the budget deficit in Egypt has worsened.
• A new strategy announced by the government to contain the budget deficit and control public debt includes many measures to raise revenues and cut expenditures.
• However the strategy did not include any measures to reform budget institutions, which suffer from structural weaknesses that are highly likely to contribute to further rises in the deficit.
• These weaknesses include: a lack of fiscal rules; a right for parliament to raise borrowing for current spending; and a dual system that separates the accounts of 700 economic authorities from the national budget.
• To prevent further rises in budget deficits and public debt, the government must reform the budget institutions to improve the structures, rules, and procedures that govern the formulation, approval, and execution of government budgets….
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