The government is set to oblige private funds to contribute 20 per cent of their revenue to the budget, Niveen Wahish reports Egyptians are used to paying for government services, be it issuing a birth certificate, renewing a driving licence, passing through toll stations or even visiting the sick in public hospitals. What many do not know is that the money has not necessarily fallen into government pockets; rather, a good part of it has been kept by the authority collecting the fee -- so-called private funds. The legality of these private funds and the degree of supervision they are subject to, as well as the amount of money they constitute, have come into question in the past year and a half. Many have called upon the government to tap the resources of private funds to finance its budget deficit, rather than borrowing from domestic banks or from international financial institutions. The government in its draft 2012/13 budget said that private funds would contribute 20 per cent of their revenue to the budget, equivalent to between LE10 billion to LE15 billion, up from around 10 per cent in previous years. According to Mohamed El-Shawy, former undersecretary in the Ministry of Planning, several laws have allowed for the creation of such entities, to create new resources to help achieve the goals of the budget with a degree of flexibility. But by law, he said, the resources of all private funds should be deposited with the Central Bank of Egypt (CBE) in what is called the Single Treasury Account (STA). The STA at the CBE holds around LE36 billion, according to government statements. But as the government has recently revealed, some funds were illegally placing their revenue in commercial banks. Government officials recently announced that by accident they fell upon the accounts of four private funds that lie outside the CBE. These four accounts hold around LE9 billion. But that is only the tip of the iceberg, according to Ibrahim Yousry of the Central Auditing Agency (CAA). He said that a task force in the CAA has come to the conclusion that there are at least 6,500 private funds and that together these funds rake in some LE200 billion annually. "The figure in the CBE does not represent total revenues, but rather unspent surpluses," he explained. Moreover, he said, many of the funds have their accounts in commercial banks, which means that the surplus is much higher. Unlike the budget, the surplus of private funds may be deferred to the following year. Yousry is against the government's collection of 20 per cent of the revenues of private funds. It means that the status quo will continue and the funds will continue to operate; "It will split the bounty with them," he said. However, International finance expert Doha Abdelhamid sees it differently. To her, accepting a larger share of the revenues of private funds goes against the principles of decentralisation and empowerment of local government. She is not for private funds handing over their resources to the government. Ahmed Khodeir, professor of public policy at Menoufiya University, does not consider the private funds a problem. He does lament the lack of transparency on how their resources are being spent, however. He says current laws allow for loopholes for corruption and there is no general supervision in place. The current law allows for the establishment of funds in specific situations where there is necessity and to achieve certain targets. But the wording of the law does not stipulate adequate regulations for their establishment, their spending or supervision. One problem of private funds is that their resources are used to pay the salaries of officials and employees of the concerned authorities. Former ministers of finance Hazem El-Beblawi and Samir Radwan have been quoted as saying that closing these funds would touch many homes and would meet great resistance. According to Yousry, this should not mean that a wrong situation should not be corrected. "If they are getting additional bonuses for a different job than their official capacity, then it would be acceptable. But often they are getting the additional bonuses for the same job, which is not acceptable," said Yousry. He is for a gradual approach to rectifying the situation of private funds. They should be examined one by one, he said. Those that exist legally should be left alone. Those that exist legally but have made infractions in their operations should have their revenues and expenditure closely monitored. Those that have been illegally established should be closed down immediately and their funds confiscated. "Those that have been set up illegally are ripping off citizens by obliging them to pay for services that could be for free or for which they had already been charged through other means," said Yousry.
