Post Response to Questions on Egyptian Fiscal Transparency

UNCLAS CAIRO 002390

SIPDIS
SENSITIVE

STATE FOR NEA/ELA and EEB/IFD/OMA Brianna Saunders

E.O. 12958: N/A
TAGS: ECON EFIN EAID PGOV EG
SUBJECT: Post Response to Questions on Egyptian Fiscal Transparency

REF: E-mails J. Speaks-K. Allen


1. (U) The following is post's response to request for information
regarding Egypt's fiscal transparency:


2. (SBU) Answers to reftel questions:

Q1: Is central government expected to receive funding under the FY
2010 SFOAA ?

A1: Yes.

Q2: Is Egypt's annual national budget available?

A2: Egypt's budget is made public. It is discussed in the
parliament and published in newspapers and online on the Ministry of
Finance website (www.mof.gov.eg). The Ministry of Finance adopted an
international system called GFS-2001 (Government Financial
Statistics) prepared by the IMF Statistics Department. In line with
this manual, the ministry produces a "fiscal statement" and a
"statistical statement" for the state budget that is posted on its
website. Defense and research and development budgets are not
declared.

Q3: Are incomes and expenditures included in the publicly-available
budget?
A3: Some income and expenditure information is included in the
Egyptian fiscal budget. Notably missing is data on presidential
expenses, military income and expenditures, public enterprises, and
the state-owned oil company.

Under Egypt's current financial management framework, accountability
and transparency are limited. Egypt has historically ranked poorly
on various budget transparency indices, most recently in the
International Budget Partnership's Open Budget Index report. While
progress has been made in recent years, it still is difficult for
average citizens to obtain timely information in an easily readable
format about actual versus budgeted expenditures. Year-end reports
are not made publicly available in a timely fashion. There is
inadequate focus on policies, priorities and performance.

Q4: Post's assessment of the extent to which the publicly-available
budget accurately reflects actual government incomes and
expenditures.
A4: There has been some improvement in the comprehensiveness of
the budget, although there continue to be concerns over the accuracy
of the data. The historical sensitivity of the transparency issue
and a lack of sound reporting practices may explain shortfalls in
transparency. The Government has consolidated many government
accounts into a Treasury Single Account (TSA),but many accounts
have yet to be consolidated into the TSA. The military and security
accounts were never envisioned to be included and it is unlikely
that the oil and natural gas accounts will be included either.
USAID has supported the Ministry of Finance in designing and
procuring an information technology system for the new tax
administration system, providing for information exchange with other
government entities and web access, as well as increased
transparency and control. The USAID program on budget management
ended in 2008 after progress stalled. The unified organic budget
law, drafted in 2008 and which would have enhanced transparency, has
yet to be passed.

Q5: Have there been any events since the 2009 review that may have
affected fiscal transparency?
A5: Since the onset of the global financial crisis, the government
has announced three economic stimulus packages totaling LE33 billion
(US$6 billion). Though the government has made public some detail on
planned expenditures under the stimulus packages, there has been no
detail published on actual expenditures and the sources of the
stimulus funds.


2. (U) Post contacts for further information and/or follow-up data
requests are Political-Economic Counselor Stephen O'Dowd
(O'Dowdsp@state.gov) and Economic Officer John Speaks
(speaksjt@state.gov).

SCOBEY