Improper Use of Egypt’s Public Pension Funds

During the past few days (May 24-27), newspapers and TV stations were revealing how the Egyptian government used 435 billion Egyptian pounds from the public pension fund. Dr. Mervat Talawi, an ex-minister of pension and social welfare was the one who stated on aljazeera.net and Dream TV station (5/26/2010 – 5/27/2010) that the Egyptian government withdrew 435 billion pounds from the public pension funds to cover its budget deficit and support the Egyptian Borsa “stock market”. This was done in violation of Egyptian law. She pointed out that there are around 23 million Egyptian workers who are contributing to the fund. At the same time, 8.5 million people are in retirement and depend on their monthly pension check. Nearly 2 million retirees get the minimum payment that is 50 Egyptian pounds per month (equal to $10).

She further noted that in 1991, Dr. Atef Sidqi( previous prime minister) , tried to shift 200 billion pounds from the public pension fund to be invested abroad. The Egyptian law clearly prevented Egyptian public pension funds from being invested outside Egypt. At the present, the minister of the treasury Dr. Yousef B. Ghali is pushing for a new law to control the public pension funds and permit the government to use it.

Dr. Hassan Naff’ah ( professor at Cairo University) called the proposed law a “government piracy to steal Egyptian workers pension funds.” (almasry-aloum.com 5/27/10). Dr. Ghali, who was educated in the United States, is trying to imitate President R. Reagan, who with the help of the American congress in the early 1980s, passed a law to lump the Social Security Tax Fund with the Federal Tax Fund in order to cover up the budget deficit. The Social Security Tax Fund was supposed to be saved to pay the future retirees, especially when the labor force will decrease and at the same time the number of retirees will increase. President R. Reagan’s act was a big mistake. Experts began to predict recently that the Social Security pension funds will be depleted during the next 20-30 years. It seems to me that the Minister of Treasury, R. Ghali, is trying to follow the same policy and the proposed law should be stopped. The public pension funds belong to the workers who need the financial help when they retire.

The big tragedy of the Egyptian society is the fact that the economic strategy of the government during the last 30 years has been drifting in all directions to benefit only a small circle of governmental officials and their close circle of corrupt friends. The Egyptian government should return the money that was taken from the public pension funds and should reject the proposed law by the minister of treasury.