The finance minister stood up to fierce attacks by independent MPs charging him with misusing the money of pension funds, reports Gamal Essam El-Din Ten independent MPs were up in arms on Sunday against Finance Minister Youssef Boutros Ghali, charging him with misusing the money of pension funds to narrow the budget deficit in violation of the constitution. Ghali strongly defended himself, insisting that his policy ensures that retired people get the highest returns on their pension money. Besides, affirmed the minister, the government of Prime Minister Ahmed Nazif is committed to living up to President Hosni Mubarak's promises of safeguarding limited- income classes and retired people against the vagaries of economic liberalisation and privatisation policies. The attacks came just three weeks after Ghali was entangled in a verbal clash with Chairman of the Central Auditing Agency Gawdat El-Malt for ignoring the agency's reports. In parliament, the list of Ghali's detractors included MPs either with leftist leanings or belonging to the outlawed Muslim Brotherhood group. Kamal Ahmed, a leftist firebrand MP from Alexandria, said the value of the money of pension funds rose from LE277 billion in June 2005 to around LE307 billion at the end of June 2007. Ahmed recalled that in 1980, the National Investment Bank (NIB) was set up to invest the money of pension funds in high-return development projects. "Although its objectives are noble, the NIB gave a mere two per cent interest rate on pension deposits, at a time when the interest rate in commercial banks was above 11 per cent," stated Ahmed. He argued that NIB's interest rate was unfair and that pensioners and retired people did not enjoy any rise in their pension salaries. "The pension money stabilised since 2005, although the inflation rate boomed during the last three years from less than seven per cent to more than 11 per cent right now," asserted Ahmed. Farid Ismail, a Brotherhood MP from the Delta governorate of Sharqiya, charged that as soon as he was appointed minister of finance in 2005, Ghali did his best to bring the National Organisation for Social Insurance and Pensions (NOSIP) under the purview of his ministry. To meet this objective, Ismail added, Nazif's government decided to cancel the Ministry of Social Insurance, which was in charge of running the investments of pension funds in coordination with NIB. Then, Ghali decided that NOSIP come under his supervision so he can use these funds, estimated at LE307 billion, to close the huge budget deficit and stem the tide of local government debts which topped LE651 billion at the end of September 2007. Fellow Brotherhood MP Azzab Mustafa from Giza said Ghali's capture of pension funds and NOSIP was in violation of articles 7, 17, 27 and 34 of the constitution, as well as many laws regulating the use of pension funds. Mustafa explained that in general, the constitution describes pension funds as "private money" and that the government is committed to ensuring that this money goes to the best interests of pensioners and retired people. "Is using this money to reduce the budget deficit and refusing to give retired people a good return on NIB's investment of their pension deposits a policy that goes in their interest?" he asked. Mustafa also alleged that previous governments used pension funds in speculation activities on the stock market. "The former minister of social insurance Amina El-Gindi emphasised that as much as LE900 million was used to buy shares on the stock market, and that as much as LE500 million was misused in speculation purposes and went to the pockets of private sector speculators, such as iron tycoon Ahmed Ezz," asserted Mustafa. Gamal Zahran, a professor of political science at Suez Canal University and a leftist MP, argued that the Supreme Constitutional Court ruled in 1992 that "deposits in pension funds are private money and should remain completely independent of the government." Zahran warned that millions of retirees have become captive to the government's bad economic policies. "Ghali's assault on their money does not provide any guarantees that these people will be able to receive their pensions in the next years, and this will be a big disaster for their living standards," noted Zahran. He added that for decades the government had been in the habit of increasing pensions by 10 per cent every year, "but this stopped in 2005, or when Ghali decided to bring pension funds under his personal purview," accused Zahran. The MP further alleged that between 2005 and 2008, the government should have paid retired people more than LE40 billion in returns on their pension funds. "It did not do this because the pension money is now in its pocket and it does not want to widen the budget deficit," asserted Zahran. Mohamed El-Omda, an independent MP from the Upper Egyptian governorate of Aswan, said Ghali found it too easy to put his hand on pension funds at a time when it is too difficult to fight tax evasion and government extravagant spending. "We have businessmen who earn millions of pounds each month and we have banking officials who receive more than LE1 in salary each month," declared El-Omda. He asked Ghali, "why he refuses to force these wealthy people to pay taxes, and finds it easy to assault the money of poor and limited-income people." The MP from the south also charged that the government sold many plots of land and public sector companies to wealthy businessmen at cheap prices, letting them impose high prices on vital commodities such as cement and reinforced steel. "This happens at a time when retired people are not able to get high returns on their money to meet the mounting costs of food, electricity and water bills," argued El-Omda. He estimated the number of people living on pension income at 55.8 million, saying that the number of pensioners stands at 18.6 million and each one of those is the bread winner for an average three others. This huge bloc, which amounts to more than half of the population, faces the threat of losing its income to the government's bad economic policies and cosiness with wealthy and business tycoons, added El-Omda. In response to these accusations, Ghali countered that while pension funds came under his purview in 2005, the running of these funds is actually in the hands of an independent board of directors. "This board includes representatives of major unions such as the General Federation of Egyptian Trade Unions," explained Ghali. "Their main responsibility is to put the money of pension funds to the best use." He added that it is Mubarak who decided to entrust his ministry with implementing the social insurance laws, "to safeguard pension funds against risks and modernise them." The minister also revealed that the amount of pension funds invested in the stock market did not exceed 0.5 per cent, and that this tiny amount in fact generates an average annual return of 23 per cent. Ghali also indicated that NIB invested some pension funds in good development projects, greatly contributing in building many highly productive projects and infrastructure facilities in the form of bridges, roads, ports, schools and hospitals. "These projects led to raising the standard of living for most Egyptians and created an unprecedented investment-friendly environment," insisted Ghali. The official further argued that the Ministry of Finance was entrusted with implementing social insurance laws in order to raise the efficiency of the pension system. This is in preparation for replacing the old pension law with one which will ensure that pensioners get no less than 70 per cent on their pension fund deposits, asserted Ghali.
