CAIRO: Former Minister of Social Affairs and Insurance, Ambassador Mervat El-Telawi, heavily criticized the Egyptian government and accused it of stealing LE 435 billion from the pensions budget in order to decrease the general state deficit and to invest in the stock exchange.
In an interview with Al Jazeera Tuesday afternoon, E-Telawi, who was also former vice secretary general of the United Nations, expressed her disapproval of the newly proposed social insurance and pensions law.
The government is “planning to pass it for ulterior motives that decrease the deficit and make the theft official,” she said.
She explained that the new law brings together the insurance money with the general state budget, which she described as illegal, or even unconstitutional.
El-Telawi was the minister of Social Affairs and Insurance during the period of 1988 to 1991.
In a phone call to Al Jazeera channel, deputy Minister of Finance Mohamed Moeet denied El-Telawi’s claims saying that “the pensions system is included in the general state budget and that the state treasury guarantees that.”
He also added that the money which was taken for investment in the stock exchange has been returned to the sate treasury.
The press office at the Ministry of Finance confirmed Moeet’s statements.
This is not the first time El-Telawi expresses her objection on television to the draft social insurance and pensions law as well as Minster of Finance Youssef Boutros-Ghali.
On the show “I was a Minister” on satellite channel Dream 2, she said that Ghali took LE 200 million from the social insurance money which were in the National Bank for Investment and LE 300 million from private insurance funds. He then invested the money in the stock exchange and lost 60 percent of it.
Ghali refuted these claims in the press saying that the stock exchange investment has generated 57 percent profit.
The proposed social insurance and pensions law is expected to increase the government’s revenues as it aims to increase the number of applicants by promising pensioners and health and injury victims more financial compensation.
This would be financed by decreasing the percentage of wages paid by lower income employees and increasing the share paid by higher income employees.
The law will also raise the retirement age gradually to reach 65 by 2027 and increase the paid unemployment leave from six months to a year.
In response to the criticism, Ghali previously said that they will not jeopardize the pension budget, which is LE 365 billion and benefits 9 million citizens, and that it’s all guaranteed in the state treasury.
In a panel discussion earlier this month, Saber Barakat, a lawyer and labor activist in the coordination committee for Rights and Freedoms of Workers Unions, said that insurance and pensions are constitutional rights and refused to call the proposed law “reform.”
“This is merely a way for the government to gather funds. The law we have now has been praised by the ILO as one of the best laws in the world. Why are we changing it? Because the law is costing the government, and the IMF says that the government should reduce social welfare spending,” explained Barakat.