Impoverishing and Austerity Budget Amid Celebrations of the Election Farce’s End

Statement by the Revolutionary Socialists

As celebrations continue over the conclusion of the presidential election farce, Sisi presses on with the austerity and impoverishment policies he started in 2013. The new general budget for the fiscal year 2018-2019 is emerging, warning of more inflation and poverty for Egyptians. This budget, drafted before the elections and finalized by the government for approval by the counter-revolutionary parliament, brings no surprises.

The budget’s primary goal remains to reduce the deficit, with the plan aiming to lower it to 8.5% from 9.5% in the current budget. However, the burden of this reduction falls on the poorer segments of society, with the state increasing revenues through consumption taxes borne by people experiencing poverty. The current budget recorded tax revenues of about 604 billion pounds, with income and profit taxes—imposed on the wealthy—accounting for less than 210 billion pounds. In contrast, taxes on goods and services, which are borne by the poor, exceeded 290 billion pounds.

In the new budget, the state aims to collect 611 billion pounds in taxes, which means that the poor will shoulder even more of the burden.

While people experiencing poverty contribute the most to these revenues, the state steadily cuts back on public spending that benefits them. As the new budget takes effect, the state plans to reduce energy subsidies, triggering a fresh wave of price hikes for goods and services. The new fiscal year will also see further increases in the prices of state-provided services like electricity, gas, water, and even metro tickets. Although the state projects inflation to reach 13% in the new budget, the policies being implemented are likely to push inflation even higher.

This surge in inflation isn’t met with a corresponding rise in wages. The new budget sets aside 266 billion pounds for wages, just 10% more than the current budget’s allocation. This means that real wages will continue to fall due to inflation, in addition to their previous decline since austerity measures were first introduced. This has pushed more than a quarter of Egyptians below the poverty line, according to the state’s own statistics.

Although the full details of the general budget have yet to be revealed, what has come out so far suggests a continuation of Sisi’s impoverishment and austerity policies, coupled with the country’s increasing debt burden. The cost of servicing these debts in the current fiscal year has reached 380 billion pounds, more than the total amount allocated for wages in the general budget.

Despite the severe consequences of these policies and their direct impact on tens of millions of workers and the middle class, the counter-revolutionary authority seems determined to push ahead with them, adding even more hardship to the lives of people experiencing poverty in the coming year. Instead of boosting state resources through a fair tax policy based on income and profits, the government is cutting back on the benefits people experiencing poverty receive from the revenues they largely contribute to. Moreover, the government wants to generate new income by reviving the privatization project and selling public assets. This bitter experience previously brought suffering to workers and people experiencing poverty while benefiting only the corrupt and investors.