1. 1 Pre-Budget Statement for the state budget of FY 2015/2016 Citizen Budget Know Your State Budget for FY 2014/2015 Egypt ……The Way To Transparency Citizen Budget Know Your State Budget for FY 2015/2016

2. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 2 Table of Contents I.Ministry of Finance Mission and Responsibilities II.Vision & Medium Term Macroeconomic Targets III.Challenges IV.Economic and Fiscal proposed policies V.Enhancing transparency and Strengthening Public Participation

3. Ministry of Finance - Macro Fiscal Policy Unit 3 MOF Responsibilities Manages Public funds and allocates them among citizens needs and priorities Plans and Prepares Egypt’s budget and Public Domestic Debt Design fiscal policy in line with macroeconomic framework Citizen P.S. The government aims at setting a program-based budgeting framework and this will improve monitoring and evaluation. Health, Education, Infrastructure, Housing, Transportation and Social Packages Taxes MoF Mission Statement (Fiscal Stability, Economic Growth and Social Justice)

4. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 4 Egypt Vision...Investing in Egypt’s human capital The government of Egypt is designing Sound Economic Policies for social inclusive and environmentally sustainable market economies.

5. In the past fiscal year, Egypt was confronted with a triple deficit GDP DECILNE EXTERNAL DEFICITFISCAL DEFICIT Real Annual GDP Growth 4.7% 2.2% 2008/2009 2013/2014 Unemployment Rate 9.4% 13.3% 2008/2009 2013/2014 +4.9pp -2.5pp -12.7 -32.7 2008/2009 2013/2014 +20Bn Foreign Reserves 31.3 16.7 2008/2009 2013/2014 - 14.6B n Budget Deficit 12.4 (7%) 44.2 (15.8%) 2008/2009 2013/2014 +8.8pp 644 (62%) 1700 (85%) 2008/2009 2013/2014 +23pp Source: Ministry of Finance, CAPMAS, Central Bank of Egypt excluding commodity grants US$Bn (% of GDP) Domestic Debt Current Account Deficit US$Bn EGPBn (% of GDP) US$Bn excluding remittances and grants 5

6. 6 Egypt’s economic development strategy rests on three building blocks Economic and Fiscal proposed policies

7. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 7 Quantitative targets and underlying assumptions in the 2015/2016 budget over the medium term

8. 8... Egypt’s Path into a Virtuous Circle The most important financial challenges we face…

9. 9 Economic and Fiscal proposed policies  A gradual phasing out of energy subsidies  Introduction of smart cards for gas and fuel distribution  Wage-bill reforms to contain public sector wages  Savings generated by both revenue and expenditure measures will be rechanneled to bolster social protection programs and to help meet the constitutional mandate requiring the government to spend 10% of GDP on health, education and research and development (R&D) by FY 2016/17

10. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 10 Why Restructuring Subsidies ?  Facing problems to finance energy products.  Most of the energy subsidies goes to the upper income segments.

11. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 11 Increasing Expenditure on Health and Education as Mandated by January 2014 Constitution In FY14/15 budget public expenditure on health and education increased relative to expenditure on energy subsidies

12. AgricultureTourismIndustry Energy/ Mining Housing/ Utilities Transportation/ Logistics OBJECTIVES Improve the living conditions of the people Promote quick job creation through the development of labor intensive sectors Address Egypt’s widening infrastructure/energy gap and reduce power and water shortages Initiate a move toward more diversified and high value added exports Mix of mega-projects and initiatives with high social returns Medium term growth target: 6% ICT The government is promoting an investment program targeting the sectors with the highest potential.

13. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 13 The most important financial challenges (continued) Increased government spending on health, education and scientific research is essential to invest in human development.

14. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 14 Strengthening Public Participation The Ministry of Finance believes that transparency, disclosure and the dissemination of reliable information is a crucial element in the ongoing dialogue with the public, who has the right to comprehensive, and useful information on how the government will manage the generated public funds and net savings by the aforementioned reforms.

15. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 15 Strengthening Public Participation The community outreach strategy is grounded on three main Aspects : I.Effective promotion of the reform measures undertaken by the Ministry of Finance. II.Ongoing dialogue of current issues (indirect defense). III.Developing a mechanism to survey citizens’ reactions (monitoring feedbacks).

16. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 16 Strengthening Public Participation The importance of informing citizens on the reform measures taken by the ministry and about the general role of the Ministry of Finance? I.Communication and transparency will encourage citizens to bear the burden of reform policies and fiscal consolidation. II.Highlighting the importance of the role played by the Ministry of Finance in devising the fiscal policy framework. III. Rebuilding citizens’ trust in the performance of both the government and the Ministry of Finance.

17. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 17 First, MOF was very keen on releasing the “Citizen’s Budget” in October 2014, which is a simplified form of the 2014/2015 state budget to be easily understood by ordinary citizens. Strengthening Public Participation  Serious steps were undertaken on the way to budget transparency to inform the general opinion about the reasons behind bold structural reforms.

18. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 18 Strengthening Public Participation  Citizen budget initiative offers citizens at large an opportunity to learn about government operations and to deliberate, debate, and influence the allocation of public resources in the future.  Citizen Budget Objectives (Raising public awareness and transparency)  Tools of communication – The availability of citizen budget at the website (www.budget.gov.eg), aims to encourage citizen's participation in the decision making process. – Facebook, Twitter, The Ministry Blog – The Financial Monthly Bulletin

19. 19 Ministry of Finance - Macro Fiscal Policy Unit Strengthening Public Participation (continued)  Moreover, MOF launched an interactive website that displays the budget outline and the main measures adopted by the government. http://www.budget.gov.eg/  Additionally, a simplified one- page brochure ‘handout’ was distributed with the newspapers to explain the major outline of the budget. موازنة المواطن مع بعض نكمل المشوار لعام 2016/2015

20. 20 Ministry of Finance - Macro Fiscal Policy Unit Strengthening Public Participation (continued)  In order to make the budgetary process more transparent, inclusive and responsive and to welcome feedback from all key stakeholders, the Ministry of Finance organized a one-day workshop to gather representatives of the government, academia, civil society, the business community and the media.  The purpose of the event was to discuss the economic and fiscal challenges underlying the formulation of the FY 2015/2016 budget, as well as the assumptions and targets on which the budget is based.

21. MINISTRY OF FINANCE - MACRO FISCAL POLICY UNIT 21  MOF is in the process of providing a comprehensive sets of fiscal data in a simplified and user friendly wayto Civil Society, NGOs, Political Parties and the Public via BOOST tool sponsored by the World Bank.  Providing training to citizens, CSOs, journalists, and university students on public finance and public financial management principles and most recent economic policies, to enhance the public awareness.  Develop mechanisms for participatory budgeting (to include monitoring and evaluation of participation, performance & impacts of selected projects & of participation tools).  Applying Programme Based budgeting. MOF future Initiative to improve public participation in the budget process.

22. 22 Ministry of Finance - Macro Fiscal Policy Unit Strengthening Public Participation (continued)  Moreover, MOF launched Citizen Budget FY 2015-2016 for the second consecutive year on the 29th of September 2015 entitled "Hand in Hand, We Complete the Journey" to inform citizens about key features of the 15/16 budget and shed light on the planned fiscal policies to be implemented in the medium and long term.

23. 23 Ministry of Finance - Macro Fiscal Policy Unit Strengthening Public Participation (continued)  In addition, the Ministry of Finance organized a one-day workshop(as the second event in a series of workshops) divided into three main topics, which are: Growth& Employment Fiscal reforms Social protection(GASC& Solidarity and dignity & healthcare for disabled)  This workshop gathered representatives from the government, academia, civil society, the business community and the media to encourage citizens' participation in the decision- making process, and to discuss the assumptions, targets, along with the economic and fiscal challenges underlying the preparation of the FY 2015/2016 budget.

24. 24 Ministry of Finance - Macro Fiscal Policy Unit Strengthening Public Participation (continued)  Additionally, a simplified Citizen Budget Booklet targeted for children was distributed to explain the budget.