President/parliament conflict begins in Egypt
CAIRO - A stand-off between Egyptian President Abdel Fattah al-Sisi and parliament over a law regulating civil servants’ pay is the first episode in a potentially long series of confrontations, experts said.
Sisi’s desire to speed up administrative reform, Egypt’s growing financial crisis and legislators’ keenness to demonstrate loyalty to constituents could exacerbate animosities between the president and parliament, they said.
“The president and parliament have two different agendas,” political expert Yousri al-Ezbawi said. “The president is under intense pressure to speed up reform, which can be costly to the people, but parliament wants to ensure that this reform will not cause millions of people to suffer, which might engender conflict.”
The row — the first since parliament convened in early January — is on the Civil Service Law issued by Sisi last March. The legislation seeks to reduce spending on Egypt’s administrative apparatus, which eats up a major portion of the country’s budget.
Civil servants’ salaries amounted to nearly $289 billion in the fiscal year 2014-15. This was almost 25% of total government spending for the fiscal year.
Egypt says it has to borrow from local sources to pay the salaries of its 7 million civil servants, noting that a resultant budget deficit, which amounts to 30% of the 2014- 15 budget, cannot keep growing. The government hoped the new law would allow it to decrease the amount paid in civil servants’ salaries by tens of billions of dollars.
The law fixes civil servants’ annual salary increase at 5%. Previously, annual increases were linked to inflation, which has generally been more than 5 5%. It also curbs civil servants’ promotions.
However, a parliament majority rejected the law on January 20th, angering Sisi. He even said that Egypt’s bureaucracy could do without 6 million of its 7 million civil service workers.
Economists say parliament has to approve the law because administrative reform and reducing Egypt’s budget deficit are necessary if Cairo hopes to receive loans from international financial institutions.
Egypt is said to be in talks with the World Bank for loans of up to $6 billion, which, the government says, is necessary for Cairo to boost foreign currency reserves and move ahead with its development plans.
“The law is right at the centre of negotiations between the bank and the government on the loans,” economist Amr Hassanein said. “Administrative reform and reducing the budget deficit cannot be more urgent.”
Egypt has to look for World Bank loans after the economies of its Gulf allies were hard hit by collapsing oil prices. Saudi Arabia, the United Arab Emirates and Kuwait have given Egypt more than $20 billion in loans, grants and oil assistance since June 2013. However, with oil prices sagging for the past 19 months, those countries cannot continue to offer Egypt a financial lifeline.
Apart from reducing civil servants’ salaries, Egypt looks to reform its subsidy regime, which cost $35.3 billion in the 2014-15 fiscal year, and increase revenues by motivating production and decreasing imports.
The government said it would introduce amendments to the Civil Servants Law and send them to parliament for approval but it is thought there is not much the government can change in the law because its main objective is to bring down spending,
Observers note that conflict is the expected scenario. The more than 300 laws issued by the presidency since early 2014 are believed to be potential points of friction between the parliament and the president.
Parliament must debate the laws soon and animosity might grow if any are rejected.
“Parliament will necessarily want to shrug off the idea that it is a mere lackey of the president,” Ezbawi said. “This is why it will assert its loyalty to the people every now and then by rejecting laws issued by the president.” That specific point was raised by MP Maysa Atwah, who said: “This parliament is only loyal to the people. This is why it will reject anything that causes suffering to the people.”