Pension funds and poverty rates were the cause of heated debate in parliament recently, Gamal Essam El-Din reports Discussion of the state budget's balance sheet for 2008/2009 caused a bitter clash between Minister of Finance Youssef Boutros Ghali on the one hand and opposition and independent MPs on the other. The fact that Ahmed Ezz, chairman of the People's Assembly Budget Committee, joined forces with Ghali made the clash more stormy and acrimonious. On 30 March, opposition MPs, mostly belonging to the outlawed Muslim Brotherhood, accused Ghali of exploiting pension funds to close the budget deficit. Ashraf Badreddin, a Brotherhood MP, went so far to charge that, "Ghali cheated the People's Assembly about pension funds." According to Badreddin, the investment of pension and insurance funds made a surplus of LE24.3 billion in the fiscal year 2008/2009. According to Badreddin, "Ghali decided to insert this surplus in the balance sheet as revenues and even gave himself the right to transfer this surplus to the State Treasury." Badreddin cried foul: "This is wrong and paints a very unrealistic picture of the 2008/2009 budget." Joining forces with Badreddin, chairman of the Central Auditing Agency (CAA) Gawdat El-Malt said, "the balance sheet should explain the sources of revenues and expenditure in a fiscal year." "Surplus of pension funds can never be considered as state revenues," said El-Malt, explaining, "real estate revenues should primarily include receipts of taxes, custom duties, foreign grants and the returns and profits of economic authorities such as the Suez Canal Authority." El-Malt also charged that, "the Finance Ministry inserted the surplus of pension funds as state revenues in an attempt to give a false idea that the budget deficit is not big, but this is wrong." Independent and opposition MPs urged Ghali to reduce the budget deficit by generating good revenues from real sources, such as imposing higher taxes on rich businessmen and charging higher prices for gas exported to Israel. El-Malt and opposition and independent MPs urged parliament to form a fact-finding committee to investigate how the money of pension funds was used before parliament gives its approval for the 2008/2009 budget balance sheet. "MPs have a right to know how the surplus of pension funds was used by the Finance Ministry because these funds are the investments of retired Egyptians and we are the representatives of these people," said Badreddin. In a request submitted to Parliament Speaker Fathi Sorour, as many as 98 opposition and independent MPs asked parliament to reject the 2008/2009 budget balance sheet. Sorour, however, turned down the opposition's request, opting to give the floor to Ezz to respond to the opposition's attacks. Ezz strongly defended Ghali, insisting that, "the preparation and submission of the 2008/2009 budget's balance sheet strictly followed the necessary fiscal, accounting and legal rules." Ezz explained that the balance sheet indicated that the final figures of 2008/2009 included LE375 billion as total expenditure and LE285 billion as public revenues. "This means that the budget deficit of this fiscal year stood at LE90 billion," said Ezz, adding, however, that "this deficit finally fell from LE90 billion to LE72 billion after the government had paid LE18 billion in loan repayment instalments." Ezz highly praised Ghali for his prudent fiscal policies that greatly helped Egypt contain the disastrous effects of the global banking crisis of 2008/2009. "Ghali reacted quickly, devising two fiscal stimulus packages estimated at LE13.3 billion to stimulate the economy," said Ezz. Also Ezz strongly refuted charges that the surplus money of pension funds was used by Ghali to close the budget deficit. "This surplus has zero impact on the deficit," said Ghali, indicating that, "the Budget Committee will soon prepare a comprehensive report about the surplus secured by the investment of pension funds over 100 years." "Preliminary studies show that the net surplus secured by these funds is estimated at LE126 billion," said Ezz. Also defending himself, Ghali said: "the government invested just LE1.5 billion out of the total money of pension funds estimated at LE375 billion in buying shares from the stock market. These shares have been securing a yearly return of LE27 per cent since 1998." Ghali, however, insisted that the surplus secured by pension funds should be used in infrastructure projects and public services rather than increasing the amount pensioners receive every month in cash. "If we offered it in cash, pensioners could use it to drink alcohol," said Ghali. Another thorny debate erupted when El-Malt cited World Bank and UN Human Development (UNDP) reports as affirming that, "the percentage of Egyptians living under the poverty line had climbed from 20 per cent in 2007 to 23 per cent in 2009 and that 77 per cent of the poor live in rural areas." El-Malt's figures irked Minister of State for Economic Development Othman Mohamed Othman who claimed that the claims were baseless. Othman cited a 2009 World Bank report on Egypt that reported a high economic growth rate during the period 2005-2009 "that resulted in impressive poverty reduction". "The report emphasised that the poverty rate in Egypt declined from 23.4 per cent in 2005 to 18.9 per cent in 2008, and this means that more than 1.8 million citizens were pulled out of poverty." Joining the fray, Ghali indicated that the value of social subsidies increased from LE95 billion in 2008/2009 to LE116 billion in 2009/ 2010 to help the poor mitigate the effects of the global economic crises. "These subsidies combined with high economic growth rates will help in pulling as many as six million citizens out of the cycle of poverty," argued Ghali.
