Governorates’ share in budget expenditure only 10%

Expenditure in Egyptian government’s budget is usually divided into three main components: the administrative apparatus consisting of thirty-four ministries and sovereign bodies; the ministries’ service bodies, estimated at about 161 bodies; and the local administration consisting of offices of all the twenty-seven governorates and the governorates’ service directorates (11).

In the budget of the current fiscal year 2020/2021, the expenditures reached 1 trillion and 713 billion Egyptian pounds, where the administrative apparatus got EGP1 trillion and 327 billion, 77.4% of expenditures; the service bodies received EGP215 billion, 12.5%, and the local administration got about EGP172 billion,  that is only 10% of expenditures, which is reflected in the continued decline in the condition of the various services, including education, health, and facilities in provinces.

The picture gets darker when we look at the wages of employees in various governorates, whether in the offices of governorates or in the services directorates therein, as they acquire 75% of the localities’ allocations in the budget, while investments targeting improvement of public services such as education, health and facilities, represent less than 13% of these allocations.

In addition, 10% of the local allocations go for the purchase of goods and services for running the daily work cycle in the offices of all governorates and services directorates, including writing tools, publications, fuel, transportation, water, electricity, maintenance, and so on.

The high share of wages in the local administration budgets is due to the high number of employees therein compared to the rest of the government budget components, where 2.821 million people work in the localities compared to 1.323 million people in the state’s administrative apparatus, and 538 thousand people in service agencies, according to the latest available data on government employment, released by the Central Agency for Public Mobilization and Statistics (CAPMAS) in June 2017, taking into mind that these figures have certainly changed in light of the International Monetary Fund terms related to the $12b loan to Egypt in November 2016, including reduction of the government’s civil servants.

Thus, it can be explicitly stated that the governorates’ budgets are wage budgets for government employees, in addition to purchase of their daily government work cycle requirements. As for the development of provinces through provision of necessary expenditures, it is still a postponed issue, and it is difficult to predict when it may be taken into consideration, due to the government’s lack of interest and its focus on developments in the new Administrative Capital, the new Alamein City and the like, and also due to the chronic and increasing budget deficit, which usually leads to a reduction in the allocations for investments upon implementation of the budget on the ground, as happened in recent financial years.

The available data of the budget’s final account of local administration in FY2019/2020 indicates that investment allocations were reduced by 12.4%, a reduction that affected the rest of expense chapters, albeit by lower rates, amounting to 6.5% in purchase of goods and services, and 5% in subsidies, where the total reduction rate in the Local administration expenses reached 3.5%.

Distribution of local administration allocations to governorates offices and service directorates – EGP 1 billion–

Spending Chapter	Total Local Admin.	Local Admin. Spending Distribution	Total State Budget	Local Admin. Share of Budget %
Wages	129.504	75.3	335.000	38.7
Purchase of Goods & Services	17.537	10.2	100.200	17.5
Interest	0.329	0.2	566.000	0.1
Subsidies	0.594	0.3	326.280	0.2
Other Expenses	1.944	1.1	105.000	1.9
Investments	21.741	12.6	280.698	7.7
Total Expenses	171.648	99.8	1713.178	10
Possession of Financial Assets	–	–	28.750	–
Loan Repayment	0.262	0.2	555.569	0.05
Total uses	171.910	100	2297.497	7.5

Source: Ministry of Finance data – Numbers rounded to the nearest EGP million

The above table shows how big the localities’ wages share is related to the total government budget wages, by about 39%. Nevertheless, localities’ wages are less than the relative share of 48.4% for employees in the administrative apparatus in ministries, despite the fact that the number of employees in the localities according to June 2017 data represents 2.1 double the number of employees in the administrative apparatus, due to the low average wage per capita of employees in local councils compared to their counterparts in the administrative apparatus, especially in some ministries such as petroleum, electricity and others.

Even the relative share of localities in terms of purchases and services, amounting to 17.5% of the total public budget’s expenditures, is much less than what the government apparatus’ share, amounting to 61% of the total allocation, and less than the 21% obtained by service bodies.

This was the same in the government budget’s investments section, where the localities received less than 8% of the allocation, compared to about 47% for service bodies and 46% for the administrative apparatus.

Budgets of governorates’ services directorates:

With respect to the share of governorates’ offices and governorates’ services directorates from the local administration allocations, the eleven services directorates in governorates have acquired 76% of the total expenditures allocated to the local administration, compared to 24% for the offices of all governorates.

Within the framework of the services directorates, the share of education directorates in governorates is 67% of the allocations for service directorates, followed by health directorates by 23%. This is due to the large number of employees in education and health directorates compared to other directorates.

Distribution of the budget of the local administration to governorates offices and services directorates – one billion pounds –

Body	Wages	Purchase of Goods & Services	Interest	Subsidies	Other Expenses	Investments	Total Spending
Total Local Admin.	129.506	17.537	0.329	0.594	1.944	21.741	171.648
Governorates’ Offices	12.439	7.773	0.329	0.227	1.332	19.419	41.519
Services Directorates	117.065	9.764	–	0.367	0.612	2.322	130.130
Directorates
Education Directorate	79.883	4.895	–	0.066	0.220	2.000	87.064
Health Directorate	25.535	4.291	–	0.020	0.351	–	30.198
Agriculture Directorate	3.376	0.083	–	0.005	0.001	–	3.465
Youth & Sports Directorate	2.400	0.063	–	0.125	0.000.4	0.100	2.688
Social Solidarity Directorate	1.899	0.067	–	0.142	0.000.3	0.133	2.241
Supply Directorate	1.172	0.040	–	0.002	0.004	0.040	1.258
Veterinary Directorate	1.178	0.054	–	0.003	0.021	–	1.256
Roads & Transportation Directorate	0.507	0.197	–	0.001	0.013	–	0.718
Manpower Directorate	0.476	0.037	–	0.001	0.000.2	–	0.550
Housing Directorate	0.459	0.026	–	0.001	0.000.3	–	0.487
Organization & Administration Directorate	0.180	0.011	–	0.000.5	0.000.1	0.015	0.205

Source: Ministry of Finance data – Numbers rounded to the nearest EGP million

The above table indicates that the wages section has acquired the largest share of the local administration budgets, whether in governorates’ offices or in services directorates, followed by allocations for the purchase of goods and services to provide the daily government work requirements at these bodies, including writing tools, publications, fuel, transportation, maintenance, and so on. This means that a smaller share remains for investments and a very low share for subsidies.

Budgets per capita in governorates:

It is necessary to find out how far the budget spending is consistent with the population of different governorates, and whether these allocations are related to number of residents only or they are related to poverty and unemployment rates in various governorates.

Distribution of local administration budget uses to governorates – EGP 1billion–

Governorate	Uses	Uses Ranking	Population	Population Ranking	Per Capita Share
Total	171,910	–	101,264	–	1,698
Cairo	13,849	1	9,942	1	1,393
Alexandria	70,770	10	5,379	8	1,445
Port Said	2,962	22	0,774	22	3,827
Suez	1,968	26	0,763	22	2,579
Ismailia	3,287	19	1,384	19	2,375
Qalyubia	7,784	11	5,894	7	1,321
Gharbia	10,201	5	5,238	10	1,947
Menufia	8,580	7	4,531	12	1,894
Kafr El-Sheikh	6,535	14	3,553	14	1,839
Daqahlia	12,090	3	6,797	4	1,779
Damietta	3,829	18	1,565	18	2,447
Beheira	10,839	4	6,550	5	1,655
Sharqia	12,777	2	7,556	3	1,691
Giza	7,634	12	9,098	2	839
Fayoum	5,254	15	3,849	13	1,365
Beni Suef	5,131	16	3,377	16	1,519
Minya	8,571	8	5,910	6	1,450
Assiut	7,954	9	4,722	11	1,684
Sohag	8,959	6	5,352	9	1,674
Qena	7,047	13	3,400	15	2,073
Aswan	4,238	17	1,569	17	2,701
Luxor	3,146	20	1,328	20	2,369
Matrouh	2,443	23	0,487	23	5,016
Red Sea	2,245	25	0,382	25	5,876
North Sinai	3,059	21	0,451	24	6,783
South Sinai	1,383	27	0,109	27	12,688
New Valley	2,378	24	0,254	26	9,362

Source: Ministry of Finance data – numbers are rounded to the nearest whole number.

The above table indicates the inconsistency of governorates population with the uses allocations for each.

With regard to the per capita spending, South Sinai governorate topped with a share of EGP12,688, followed by the New Valley Governorate EGP9,362, North Sinai Governorate EGP6,783, Red Sea Governorate EGP5,876, and Matrouh Governorate EGP5,016, all of which are border governorates. This may be due to the increase in costs of projects therein due to the added cost of transporting building materials and supplies, as well as the higher wages compared to other governorates, due to additional bonuses for working in those border governorates.

Wages in governorates budgets:

The total figure of uses is not sufficient to demonstrate the distinction of the share of some governorates, as those uses are divided into six main chapters including: wages, the purchase of goods and services to manage the daily government work cycle in government departments, the debt interest, subsidies, investments, and other expenditures, where the share of wages tops at the expense of the rest of spending aspects, most importantly investments that are directed for roads, infrastructure, housing, health and educational facilities, etc.

Distribution of wage allocations to governorates – EGP 1billion –

Governorate	Uses	Wages	Wages Ranking	Wages Rate to Uses
Total	171.910	129.504	–	75.3
Cairo	13.849	9.039	3	65.3
Alexandria	7.770	5.473	12	70.4
Port Said	2.962	1.578	23	53.4
Suez	1.968	1.347	24	68.4
Ismailia	3.287	2.388	19	72.7
Qalyubia	7.784	6.450	8	82.9
Gharbia	10.201	8.846	4	86.7
Menufia	8.580	7.254	6	84.5
Kafr El-Sheikh	6.535	5.308	13	81.2
Daqahlia	12.090	10.419	2	86.2
Damietta	3.829	2.977	18	77.7
Beheira	10.839	8.205	5	75.7
Sharqia	12.777	11.096	1	86.8
Giza	7.634	5.909	11	77.4
Fayoum	5.254	3.876	16	73.8
Beni Suef	5.131	3.957	15	77.1
Minya	8.571	6.871	7	80.2
Assiut	7.954	6.061	10	76.2
Sohag	8.959	6.099	9	68.1
Qena	7.047	4.537	14	64.4
Aswan	4.238	3.061	17	72.2
Luxor	3.146	1.933	21	61.4
Matrouh	2.443	1.103	25	45.5
Red Sea	2.245	1.029	26	45.8
North Sinai	3.059	2.370	20	77.5
South Sinai	1.383	0.732	27	52.9
The New Valley	2.378	1.579	22	66.4

Source: Ministry of Finance data – with numbers rounded to the nearest million pounds.

It is natural for wage allocations to each governorate to be related to the number of government employees, where Sharqia governorate, the third in population, comes on top of the list, followed by the Dakahlia governorate, the fourth in population, then comes Cairo in the third place despite It is the first with respect to population, and so on.

This can be explained by the fact that citizens in provinces prefer government work due to job stability, health insurance, social services, and others, in addition to the lack of job opportunities in private sector companies.

Share of investments in governorates’ spending:

While wages accounted for 75.3% of the total uses of the local administration, the proportionate share of investments reached 12.6%, a value of EGP21.7 billion. Distributing these investments to 27 governorate offices and 297 services directorates in the governorates, i.e. 324 governmental administrative bodies, it is clear that the relative share of governorates offices and services directorates is low.

Distribution of investment allocations to governorates – EGP 1billion–

Governorate	investments	Investments Ranking	Per Capita Investments	Ranking of Per Capita Investments
Total	21,741	–	215	–
Cairo	3,319	10	334	1
Alexandria	946	16	176	6
Port Said	995	5	1286	4
Suez	333	8	436	27
Ismailia	423	13	306	23
Qalyubia	592	24	100	18
Gharbia	593	22	113	17
Menufia	577	21	127	20
Kafr El-Sheikh	617	17	174	15
Daqahlia	583	27	86	19
Damietta	447	14	286	22
Beheira	927	20	142	8
Sharqia	692	26	92	11
Giza	803	25	88	9
Fayoum	604	19	157	16
Beni Suef	651	18	169	13
Minya	703	20	119	10
Assiut	952	15	202	5
Sohag	1,740	12	325	2
Qena	1,415	9	416	3
Aswan	518	11	330	21
Luxor	683	7	514	12
Matrouh	933	2	1916	7
Red Sea	646	3	1691	14
North Sinai	347	6	769	25
South Sinai	357	1	3275	24
New Valley	344	4	1354	26

Source: Ministry of Finance data – Numbers rounded to the nearest million pounds.

The criterion of ranking governorates in terms of the value of investments allocated to them is not sufficiently expressive of the impact of these investments in each, given the difference in the number of population, and it is natural that the value of investments is related to the number of the population, therefore, the per capita share of investments allocated to the governorate was used to indicate the impact of these investment allocations on each.

Distribution of subsidy allocations to governorates – EGP 1million –

Governorate	Subsidies	Ranking Subsidies	Ranking Subsidies to Population
Total	594	–	–
Cairo	58.8	1	1
Alexandria	30.5	5	8
Port Said	9.2	25	21
Suez	8.2	26	22
Ismailia	10	24	19
Qalyubia	22.3	11/	7
Gharbia	23.5	8	10
Menufia	27.5	6	12
Kafr El-Sheikh	25.3	7	14
Daqahlia	53.6	2	4
Damietta	12.8	19	18
Beheira	20.1	14	5
Sharqia	22.7	9	3
Giza	40.4	3	2
Fayoum	12.5	21	13
Beni Suef	22.3	11	16
Minya	16.6	16	6
Assiut	20.9	12	11
Sohag	18.3	15	9
Qena	11.9	22	15
Aswan	14.8	17	17
Luxor	13	18	20
Matrouh	32.4	4	23
Red Sea	12.6	20	25
North Sinai	22.4	10	24
South Sinai	20.3	13	27
New Valley	11.3	23	26

Source: Ministry of Finance data – Numbers rounded to the nearest million pounds.

The above table shows the low share of the local administration in the subsidy allocations, which is clearly visible in governorates such as Suez, Port Said, Ismailia, New Valley, Qena and Fayoum, although they are distributed among the governorate’s general office and 11 service directories in each governorate.

Conclusion

If there is a clear complaint about the low share of the local administration from the government budget allocations, and another complaint about the acquisition of wages and the purchase of goods and services for government-affiliated entities on the largest share of those allocations, then the third problem is the failure to implement those allocations announced by the budget when it was approved, according to the final account data for the FY2019/2020 budget.

The problem of non-fulfillment of the local administration allocations announced at the beginning of the current fiscal year is due to several factors, most notably the emergence of the second wave of the COVID-19 pandemic consequences, with its due additional expenditures and the Prime Minister’s Decree No. 1763 on reducing budget spending, in addition to increasing internal and external government borrowing, where its cost, including interest and premiums, is given first priority with respect to the budget spending at the expense of investments and other areas of spending, whether allocated to the local administration or to other government entities.